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Pacifica Biodiesel Project Running on Fumes

Biodiesel project in Pacifica hit a funding snag
By Jane Northrop
Pacifica Tribune
Posted: 06/04/2009 05:55:44 AM PDT
The downturn in the economy is making it difficult for Whole Energy Fuels to move as quickly as expected on the new proposed biodiesel facility at the Calera Creek Wastewater Treatment Plant. Pacifica City Manager Stephen Rhodes said the proposed project, which would convert used vegetable oil to fuel, is on hold pending funding issues. "Whole Energy has had problems lning up investors in the project due to the decrease in gas prices and the downturn in the economy," he said. Nevertheless, the grant Whole Energy received from the Clean Air Resource Board remains available, if Whole Energy can meet certain milestones, Rhodes said. The ptoject is also on hold until Whole Energy lines up the proper permits from the city of Pacifica's building department to proceed. Last month, Whole Energy workers began digging a trench on the site, but was told by Jason Lo, city of Pacifica's code enforcement officer, to stop. "I received a complaint. I responded and researched if there had a permit, but they did not. They were directed to stop until the requisite permit from the building department was obtained," Lo said. Cal-OSHA also investigated, as a permit is required from Cal-OSHA, as well. Numerous phone calls and emails from the Tribune to Whole Energy over the last few weeks were left unanswered. According to the city of Pacifica's building inspector, Whole Energy has not taken any steps toward acquiring city permits to build.

[forwarded by Mark Stechbart]


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"the plant wasn't going to be an economic success for Pacifica, beyond a job or two and $65,000 a year in land lease fees"

That would have been one job or two and $65,000 a year more than Pacifica is going to get from that parking lot now. Any missteps or misstatements (and there always are some of those in any large undertaking) by WEF and/or its protagonists are quite irrelevant considering the sucker punch dealt by the economy and by petro-diesel prices. If the economy hadn't taken a dump, I don't know how much Pacifica could have demanded without killing the deal. That isn't my realm of expertise, but it did represent some potential positive cash flow, and I believe that the guaranteed benefits to the environment exceeded the possible (I believe unlikely) risks to the environment.

I really do appreciate serious, sincere scrutiny of such things by people, such as yourself, Todd, who aren't simply gunning for the council. I still think the biodiesel plant would have been a good thing even if a shrewder deal might have netted us more money.

Dan, the plant wasn't going to be an economic success for Pacifica, beyond a job or two and $65,000 a year in land lease fees. The fuel was to be sold from the city of Richmond, so there were no sales taxes to be had. Environmentally, the project never got beyond the conditional permit, so any determination from the USFWS was never filed with the CCC.

WEF did itself in, not any local opposition. My concerns were addressed by the Conditions of Approval in the CCC permit. Any concerns I had thereafter were procedural missteps or misstatements by WEF or its protagonists.

I think whoever it was that made reference to the "Hail Mary Trench" was pretty much accurate. It was a last-ditch (forgive the pun) effort to make good on their promises.
I don't expect that the hard-core detractors of the project would have had anything positive to say if the biodiesel plant had turned out to be economically, ecologically, and in all other ways, perfect. In contracting, we do try to have our permits and other legalities in order before we proceed. Not doing so is hardly a criminal act. We all have a great number of concerns we are trying to navigate, and I daresay Whole Energy Fuels had more to concern itself with than I ever did. As soon as petrodiesel prices went through the floor, I was pretty sure the project was doomed. Now Mr. Wagner and Mr. Stechbart express an interest in dancing on the grave of the biodiesel plant. They could go ahead and do so, but I fail to see any purpose in it. When oil prices return to normal, or when oil can't be had for love or money and any one of many possible sources of the proper lipids proves workable, we all may regret our not having our own local biodiesel plant.

That's the problem with optimism as a planning tool, rather than real world demands for capital and credit to back up a speculative venture.
"We sure hope it'll work!"

The grease refinery had many defects. But why did Council member Jim Vreeland and this city push a plant that had unconfirmed and ultimately no finances? This city wasted around $75,000 of taxpayer money that it cannot afford to spend. In December 2008, Whole Energy Fuels (WEF) got California Air Resources Board (CARB) grant money after asserting that WEF had all its permits and financing. City Manager Steve Rhodes contradicts that assertion in the posted Pacifica Tribune story.

The city land lease expires at the end of June. Finally, for WEF to collect any more CARB money, the plant has to be finished by June 30.
Perhaps Mr. Vreeland and Ms. Hall would like to explain how this came to be on their watch?

This project went from expansive, glowing accolades at the Coastal Commission hearing on July 11, 2008 to train wreck in under 11 months.

----- Original Message -----
From: rhodess@ci.pacifica.ca.us
To: mstechbart; o'connellk@ci.pacifica.ca.us
Cc: jnorthrop@bayareanewsgroup.com ; elarsen@bayareanewsgroup.com ; citycouncil@ci.pacifica.ca.us
Sent: Thursday, June 04, 2009 11:01 AM
Subject: RE: Whole Energy failing

In answer to your questions regarding Whole Energy:

1. Since the discussion on Friday is for the next Fiscal Year budget there will not be a discussion of expenditures in the current budget. The City has halted any expenditures on the project. It should be noted that the City planned to only spend funds for legal costs to prepare the lease and to rebuild a generator for use with biodiesel. The legal costs were around $65,000 and expended in 07/08 & 08/09. The cost for the generator was estimated at $75,000 and around $4,500 had been spent on the generator before we halted work on it.

2. The City did not plan to recover its legal costs from WE. The costs from the generator were to be recovered when the CARB grant for construction was paid to WE. The generator, if not used by WE, will be placed in service at another City location.

3. You are correct that the WE lease expires on June 30, 2009. To date there have been no discussions regarding renewal of the lease. Such an action requires Council approval at a public meeting so the public would be informed prior to such action and terms and conditions of the lease would be a part of that meeting. WE was not obligated to commence payment on the lease until the completion of the biodiesel plant.

Steve Rhodes
City Manager
City of Pacifica

From: mark stechbart
Sent: Thursday, June 04, 2009 10:03 AM
To: Rhodes, Stephen; O'Connell, Kathy
Cc: NorthropWK Jane; Elaine Larsen
Subject: Whole Energy failing

Per wed Tribune article, some measures are needed Re WE and City expenditures. The City's financial position has to be protected.

1. for friday's budget hearing (June 5), a full disclosure of City expenditures on the WE project is now timely. Probably be a good idea to stop spending any additonal City funds until Councilman Vreeland explains to the public what is going on.

2. how will City expenditures to date be recovered in the very likely possiblity of a WE failure? Is the City protected by a performance bond?

3. the sewer plant land lease WE holds with the City expires June 30, 2009.

a) what is status of any lease renewal?

b) when is a Council hearing set to discuss lease renewal.

c) how much has WE paid for the land lease to date?

d) going forward, how much will WE pay for the land lease if the lease is renewed post June 30?

I thought we were told they had millions in private investments.

I sort of expected the biodiesel plant project to have problems as soon as petroleum prices dropped and stayed low for some time. The problems with peak oil aren't solved and won't go away. Biodiesel is just one of many alternatives. Without this depression or recession or whatever we are calling it I think it could have been a real boon to Pacifica. Ah well...

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