Careful planning = successful operations
Assessing the potential of a new market, finding the right site, obtaining all required permits and securing intake contracts are all components of project development for new McGill composting facilities.
Development activities may be triggered by a request from an existing or prospective customer, a conversation with a regulator or legislator, a Request for Proposal (RFP) issued by a municipality or something as simple as a news article from a region of interest.
The initial development process continues until we either (a) discover a reason not to pursue the project further or (b) all required permits are issued for facility construction. Even after construction begins, business development activities related to the procurement of signed contracts from future waste management customers continues until the facility reaches full operating capacity. As construction nears completion, business development activities related to compost sales begin.
The development process typically takes 1-2 years, though it can be longer in states where review of the regulatory permit application spans many months. In most states, however, permit review is completed in 6-9 months.
Phase 1 – Pre-construction development
A typical development budget ranges between $350,000 and $500,000 per facility and follows a specific sequence of investigative and evaluative stages:
Step 1 | Preliminary Assessment. Broad brushstroke information is gathered about a particular geographic area, usually defined by an anchor metropolitan statistical area (MSA), plus any other metropolitan areas within about 60 miles of that point. This cursory review looks at:
- POPULATION – population figures allow us to make calculated available-volume estimates based on known per capita generation rates for a number waste streams, including food waste and biosolids.
- POPULATION DENSITY – indicates where waste generators and compost markets are likely to be concentrated, as well as areas where siting is probably not practical due to land acquisition costs and/or neighborhood profile.
- PER CAPITA INCOME – along with the percent of single-family residences, education levels and other demographic information, serve as indicators of both enthusiasm and support for composting services and markets for compost products
- REGIONAL TIPPING FEES – serve as indicators of profitability for an industrial-scale composting facility serving the region.
- COMPOSTING REGULATIONS AND MANDATES – policy and laws governing composting vary from region to region, impact siting, design, construction, operation, feedstock availability and compost markets.
- MANUFACTURING BASE – one or more manufacturers with large, biodegradable waste streams help to solidify foundation feedstocks, while big facilities with large employee populations and in-house food service offer potential sources for food waste.
- FEDERAL FACILITIES – government green purchasing mandates make large military bases and other government complexes likely customers for composting services and compost products.
- COST OF PROPERTY ACQUISITION – agricultural, industrial or timber tract properties recently sold and suitable properties currently on the market provide an estimate of local market prices for land.
During data collection, values are assigned to various criteria and compared to McGill assessment benchmarks. These rankings are compared to values for existing McGill facilities, as well as other successful commercial composting operations, to determine probable economic viability for a facility serving the proposed location.
Low scores often result from small populations, an insufficient number of “probable” volume generators, or low landfill tipping fees for the area. In such cases, investigations are halted and the region eliminated as a potential market. However, if the region’s score warrants further investigation, development moves on to the next step.
Depending on ease of information access via the web, preliminary data collection may take several weeks. “Ease” is determined by the amount of public access information available from government websites in search-friendly formats.
Step 2 | Marketing Survey. The purpose of this activity is to (a) confirm the calculated economic assumptions made during the preliminary assessment and (b) use geographic concentrations of specific feedstock generators to help focus the site search.
To confirm calculated assumptions, members of the business development staff conduct phone and in-person surveys of potential customers. The goal is to gather as much information as possible about waste generation volumes, current disposal methods and related costs to generators in the designated service area, specifically:
- Identity/locate major generators of compost-compatible waste streams in the municipal, industrial and agribusiness sectors
- Disposal/reuse practices employed by those generators, including related costs, technologies, contractors and current contract terms
- Number and location of other high-volume organics processors providing services in the region (big generators prefer to deal with large, experienced recyclers like McGill)
- Pending legislation or policy changes, announcements of new organics processors expecting to enter the market and any other information that might influence the economic viability of a facility serving that market
- Compost sales potential, i.e., number of sports fields and golf courses, stormwater management programs, landscapers and landscape supply
The length of time required to conduct this assessment also takes several weeks, depending on the market’s potential. Investigations of promising markets in highly-populated areas could take a few months.
Step 3 | Site Search. Sometimes, potential sites are offered in a generator-issued Request for Proposals or as property already owned by a potential client-owner. But, usually, McGill is required to look for possible sites as the next step in facility development.
It surprises some to learn McGill’s first priority when selecting a site is not related to the property itself, but to elements outside of McGill control – state and local regulations, distance from good intake and compost markets, local tipping fees, zoning, compatibility with the host community, traffic routes, etc.
Low evaluation marks for even one of these influences can eliminate a site from consideration. Every property we find of the right size and in the right geographic area is evaluated first for appropriateness. Only when it passes this basic test will factors like price and specific site features come into play.
For McGill, an ideal site will —
- Contain 5-50 acres, depending on the size of the facility, the host community, existing site infrastructure and buffers
- Be in close proximity to major highways without having to move trucks through residential neighborhoods
- Offer industrial or other appropriate zoning with compatible neighbors
- Offer a level or gently-sloping site with no streams bisecting acreage intended for the active production zone
- Offer incentives, which may include public/private collaboration opportunity
- Offer acquisition and site preparation costs within budget targets
A McGill project developer searches for and identifies closed or active waste management sites, brownfield and other abandoned industrial sites, forest land, and similar properties in the target region that meet some or all of the above criteria, then forwards the most promising locations to site specialists for “boots on the ground” investigations that include:
- Acquisition and review of property surveys
- Walking surveys of the properties for suitability relative to construction and neighbors
- Windshield surveys of proposed truck access route(s) to verify suitability relative to bridge weight limits and community impacts
Once a good property candidate is identified, initial negotiations with the landowner completed and an option on the property secured, McGill will initiate:
- Formal meetings with targeted customers and regulators. For regulators, this may include a site visit.
- Archeological, environmental and other site assessments required by jurisdictional entities and/or McGill. This typically involves the participation of outside specialists.
This process can take 3-6 months.
Step 4 | Zoning. If a zoning variance or rezoning is required, this becomes the first Phase 2 activity. While specific requirements vary from state to state and community to community, this typically calls for preliminary engineering and related drawings, formal reports from the environmental/archeological assessment, one or more meetings with zoning officials, public hearings and, sometimes, formal presentations to zoning boards, city planners, councils and other stakeholders.
Once the required zoning has been secured, the project enters the formal permitting stage:
Step 5 | Stormwater permit. Typically, this permit is secured as a prelude to submittal of required state construction/operating permits. But if not required as part of the regulatory permit application, development of the stormwater plan and obtaining relevant permits and approvals runs concurrent with regulatory permitting. This process can take 3-4 months and may require participation by local engineers.
Step 6 | Regulatory permits. With zoning and stormwater permits in-hand, the project is (finally) ready to move on to the formal permitting process. This may require completion of site-specific civil engineering and drawings not otherwise required during preparation of the stormwater plan.
Because McGill facilities process all types of organics, it is not unusual for multiple state agencies (solid waste, wastewater, industrial waste and agriculture) to claim jurisdictional authority over one or more phases of the operation. Typically, the state will designate one agency as the “lead” that will, in consultation with the other divisions, write the permit and assume primary responsibility for ongoing monitoring of the operation.
However, when multiple permits are required, they are prepared and submitted simultaneously. Permit applications are prepared in-house by McGill staff and/or a local consultant familiar with requirements specific to the locale. This process typically takes 3-6 months, but can be longer.
The actual application review by state agencies can take anywhere from 6 to 24 months and is outside of the control of McGill. During this waiting period, McGill is busy generating sales materials, attending trade shows and becoming involved in other regional organizations and activities as a prelude to facility opening. Construction specifications are finalized, the project is bid, and a general contractor is selected.
It is usually at this juncture that a project manager (the future plant manager) joins the McGill team to secure intake contracts and serve as the liaison between McGill and regulators.
As permit review nears completion, the project manager’s role shifts to that of construction manager. S/he will serve as McGill’s chief liaison with the general contractor throughout the 18-24-month construction period.
Phase 2 – Construction and Start-Up
Once all required permits have been issued, McGill and the landowner execute the sale or lease documents and construction begins in earnest. Final specifications are prepared by the McGill team, the project is bid and a general contractor is hired. While many members of the McGill team will be involved in various aspects of construction oversight, the project manager serves as McGill’s primary liaison between the company and the general contractor’s construction manager. S/he also coordinates any on-site visits and inspections required by regulators.
“Green field” construction takes 18-24 months. If the site is located within a landfill or other property where some required infrastructure is already in place, time to start-up can be reduced by up to six months.
About 30 days prior to start-up, one or more members of the McGill development team will be at the site full time to oversee equipment installation. During this period, the operations and office staff is also hired and trained. Intake contracts are finalized and transportation scheduled. Websites are updated and press releases issued. A ribbon-cutting ceremony is planned.
Once the facility begins to accept material, the “development” phase is complete and “start-up” commences. During start-up, training is completed, equipment is tweaked and operating procedures/protocols are reinforced until the facility reaches full capacity or passes its first 90 days of operations (whichever comes first). At this point, operations are officially handed over to the owner’s management team if McGill is not contracted to operate the facility.