Video recording

So this is an example of those things listed before. The photo in the top left is the outlet structure. So, we had to find that from the drawing which is on the top right and that's how we find the inlet and the outlet. They're highlighted on the drawings. Um, the bottom right is the overview of the pond. And then bottom left is what our reports look like with the information from each pond. And then sometimes we have to go behind houses for the ponds with easements. So, this is how we locate the easements. They're on the asbuilt drawings and we highlight them and bring them with us in case there are any questions as we're going to inspect the ponds.

>> Um, we also did wood lot surveying this summer. Um, first I mapped out potential wood lots that were 5 acres or more using your map. And then we went to 78 wooded areas and collected data using survey 123. We collected photos and counted the trees. Uh, this was to ensure the wood lots met the EPOD standards in the town code. In the end, 75 wooded areas met the town criteria for a wood lot. And then Caitlyn mapped out each wood lot with uh ARJS. So this is the near map data that I first um first found. And then this is a sample from uh wood lot 57. Uh we made sure that the trees were 4 ft high and had a diameter of at least 6 in.

And then this is an example of what one of the wood lots. So each data point has this type of data. >> Um from that Caitlyn mapped out the existing map that um was approximately 12.4% 4% uh like the old map that was the Woodlot EPOD and approximately 2,600 acres of land was the Woodlot EPOD. And then in the proposed new map, there's 14 14.1% um with lot EPOD and approximately 3,000 acres. And this is um a map comparing the existing map and the proposed map. So the dark green is the proposed map and then where you can see where they kind of have some overlap. Uh as far as GIS mapping went, I made interdep departmental reference maps.

I created maps from requests that we got in um made maps for grant applications as well as attending weekly GIS meetings with the consultants and continued work on our public facing GIS program which involved finding reference layers um coding interactive maps and getting pop-ups to work so when you select things their specific information comes up. So this is an example of an interdep departmental map I made. It is a engineering MS4 resource. It is the Webster wersheds with creeks and streets. This was a map I made from a request from the Webster Central School District so that they could map out their late bus routes.

So that is the school district boundary with streets. And then from that they gave me a sketch back and I digitized that and made this map that they have now laminated and posted in their schools for students to find their late bus runs. And this was an example of one that I made for a grant application. This is our huck 12 wersheds which is the hydraological unit code which are different from the actual waterheds and this was a requirement for one of the grants we applied for. Uh we also did subsite inspections. Uh we received in the beginning of the summer our 4-hour erosion and sediment control certificate.

And at each of the 10 construction sites, we would look at their integrity to make sure they were compliant with uh New York State permits and the construction sites storm water pollution prevention plan. Uh pollution can be anything from litter to water with sediments flowing into the surrounding streams. We would look for best management practices such as silt fence, silt socks, and water control equipment. We also conducted sewer, storm water lateral inspections at new construction sites. Uh so we coordinated with the builders for a time to come out when they would be finished installing them.

We arrive on site, use a level to determine that it's pitching away from the house and it's over 2%. uh we would capture pictures like the ones to the right and then we would write reports and that's an example of a report with the slope pipe and type of joint. We also did downspout inspections which is the same process as the sewer storm lateral inspections and this can be done before or after the full house is built and the reports are slightly different and so the picture above is of a one before the house is built and the picture below is after the house is built. Um, some of my highlights were I enjoyed learning about the government and construction side of environmental science.

Um, this job introduced me to new career paths such as wetland delineation and environmental roles roles in government. Um, my favorite assignment to work on was the pond inspections and the wood lot surveys. And my favorite experience was holding the frog with one eye while we were doing pond inspections. Um, this internship gave me experience and knowledge in multiple topics that I now value like construction, surveying, and town board meetings. And this is a picture of the frog with one eye. And my highlights were I enjoyed working on the pond spreadsheet and the survey and making sure all the formatting was the same and that each pond had the same information included so we have a a standard going forward.

Um, I learned that I like field work for short periods of time, but I would prefer a desk job. This internship gave me insight into how government works and I could definitely see myself working in the public sector. My favorite part of the year was the GIS assignments I was given to complete. I was able to teach myself new skills on ARJS that I can use in my future endeavors. And my second favorite part was all the wildlife that we saw during our inspections. And that is a little snake that we saw while we were out. >> Any questions? >> I have one question and I'm not sure it's fair to ask either of you this question.

Um Josh might be able to better address it. When we talked about this wood lot surveying process and we look at the two different maps where there's the overlay, do you have any idea when the last time we did a wood lot survey was? >> Uh yeah, the existing wood lot map was done in 1979. >> Okay. >> So it's been quite some time since it's been updated, >> which is why we would see such a growth in the area because trees have just grown and gotten bigger. if they haven't been taken down for development. >> That is part of it. Yes. >> Okay. So, this was a great opportunity for the town certainly to gain some additional resources using our summer interns.

Sorry to say using, but um >> leveraging. >> Leveraging. Thank you. That's a much better word. Leveraging our our interns. And I I just think we started this program 3 four years ago using summer interns and it's it's really just been a tremendous benefit both to the town and I hope to the interns. >> Um so we have really appreciated everything that you've done for us this summer. >> What are your plans now? James, I'll go to you first. >> Um on Monday I'm going back to Brockport to finish my last semester of college. So, I'm very excited for that. >> And what is your degree program? >> Um, environmental science and with a concentration in wildlife and terrestrial ecology.

>> Great. Caitlyn, >> um, I'm staying with the town part-time through November. And the other part-time where I'm not here, I'm going to be an assistant coach at Buffalo State coaching softball. >> Fantastic. Nice. >> That is great. So, will this become the new official EPOD map? >> Yes. Uh, we will be bringing this before the board for their consideration to adopt the new map and we will also have to adjust some of the text of our code associated with the regulations. But yes, we we look forward to bringing this before the board in the near future. >> Excellent. Thank you. Thank you for all your hard work.

Lots of good stuff. The other thing I really like is I I think through experience we often find what we dislike as well as like and that's an important learning experience as well. >> Um >> thank you you both. >> Yes. >> For your experience work >> and best of luck to you. >> Thank you. >> Anything else? >> You and Jennifer took my thunder. I was going to talk about the e- pods and I greatly appreciate all the work that you've done and will continue to do when you when you come back till November. Um, your input's been very valuable to the town. Really has. I'm glad that we did start this three years ago and I hope we continue to do this because it benefits not only the town but it benefits the uh the students that are here.

So, thank you so much. >> Thank you. >> Okay. The next topic we have and we are oh maybe five minutes ahead of schedule which is good because I have a feeling there's going to be a lot of of conversation about this is we have a presentation on Webster WPCF bio gas tax credit opportunities. We've got Rick Connealy U. Paul Adams is going to sit in on this as well as Bob Whmer and Roberto Davis from Navatas. Thank you. I didn't realize when uh when uh Tom was asking me to come back last month when I was here, I would get to see the interns cuz last year I got to see the interns presentation. So, it's a great program.

I mean, for everyone in the engineering field, um, we love to see interns because it, as you said, when you hire them, they know what they want to do and you're not bringing them into a position that they ultimately don't want to do. So, I thank you to Webster for for hosting that program. I do appreciate it. >> You bet. And and we all did get a sneak preview of this when you were here last time, but we ran out of time. >> Yes. >> And felt that it really deserved uh a discussion all on its own. So, um, I appreciate you coming back and and uh showing us this. Okay, I appreciate it. Uh, so what we want to talk about is a uh a tax credit uh grant opportunity uh that uh has become available to the town uh at the wastewater treatment plant associated with uh with the bio gas that is produced as part of the system.

So bio gas or digtor gas um this is part of the uh production from the anorobic digesttors. So part of the upgrades to the facility there are the addition of a new 1 milliongal uh anorobic digtor and uh that digtor converts uh solid material uh into a gas um and it includes both uh what are known as primary sludge and waste activated sludge. These are the two byproducts of treating uh sewage as they come into the wastewater treatment plant. Um and it will also convert high strength organic uh waste. Uh so this is uh the byproducts of food production uh such as the Fairlife facility. Uh commercial kitchens uh and other uh entities that produce an organic waste material.

Uh digtor gas uh is primarily energy. It's 60 to 70% methane or natural gas. Uh it includes a fair bit of water vapor. Uh the digesttor gas is is saturated with water. And the remaining components are primarily carbon dioxide. So about 30 to 40% carbon dioxide. So historically uh the digesttor gas uh was just uh burned off uh or vented to the atmosphere. Um the upgrades to the facility uh uh do two things for it. The first is going into the digtor boilers. Uh these are commercial boilers that uh convert the digtor gas into heat and that heat is utilized to heat the digesttors which keep keeps the biological process going and uh that boiler also heats all of the uh digtor building.

So all of the building heat is provided uh by this boiler. Uh so one of the benefits of this project was this reduced the natural gas uh purchase uh for the wastewater treatment plant. Um so this is about 47% of the average production. Any excess uh gas production uh is combusted in uh the flare which is in the bottom right picture. Uh so this is a uh both a regulatory and a safety uh component to the project. Um and the uh remaining gas is safely combusted and destroyed uh in that flare uh to meet uh the regulations. But uh that 53% of the produced gas um basically has no financial benefit. So it's just destroyed.

So the question comes up is uh you know is this a potential asset that Webster can do something with? Uh for instance uh it can be utilized uh to uh reduce utility expenses or potentially create a revenue source and I'll go into detail on that in a little bit. Um, it can be utilized as a marketing tool uh such as the way the uh dried product uh building was done for bringing uh potential industry into the Xerox property. And most importantly uh is this digtor gas uh now provides a potential funding source uh via a tax credit or grant program uh that the federal government is now uh operating. When the project originally started, uh this tax credit program uh was not available.

Uh it was not in force. Uh it was a uh legislation that was passed at the end of 2022 and the regulations were put into force in 2023. So when the project first started, this was not an opportunity uh that Webster was presented with. So in terms of how you uh get a reduction in utility expenses or create a revenue, there's two uh main approaches to doing that. Uh the first is to convert that gas into electricity and heat. This is what's known as combined heat and power or CHP. Um so the the digesttor gas has uh uh the water removed. It's combusted uh and then it creates uh heat and electricity uh with the potential the amount of gas out there to produce or to produce enough energy to reduce the power consumption at the facility by h 100,000 to $200,000 per year.

Um our initial estimates on this project, we've done some high level evaluations, um is that there's about a $5 million capital investment in order to get the equipment and facilities necessary uh to put a combined heat and power system in. The second option uh is what is known as the conversion to renewable natural gas. Uh so this is taking that digtor gas and making the equivalent of natural gas that's piped into homes and commercial businesses here. um the uh carbon dioxide and other components are removed uh from the digtor gas. Uh it would be injected into the RG& gas distribution system and that gas can be uh sold back into the system uh as a revenue source.

And based on uh some discussions with uh those who buy uh renewable natural gas, um the range of value for Webster is between $300 and $600,000 per year uh in revenue uh from the sale of that renewable natural gas. This is a more capital inensive system um because of the way uh the technology uh is implemented. So our initial highle estimates are that this is about a $9 million capital investment. So looking at um this uh just as an example uh this is a uh renewable natural gas uh cleaning system. These are uh containerized systems uh that utilize a series of uh membranes to uh remove uh the carbon dioxide and then produce natural gas at the end of the day.

So one of the other things we talked about as a potential advantage of this is through the viability of a marketing tool um for this when um Fairlife uh first was evaluating different uh towns and municipalities for the placement of their new facility uh one of the things that uh drew them to Webster as we talked to them after the fact uh was the dried product or the fertilizer production facility uh that is currently under construction at the wastewater treatment um that for Fairlife was very important because it allowed them to meet their internal goals of uh taking waste from their facility and turning it back into the farms that produce the milk that they then process.

So they liked the idea of closing the loop of taking nutrients out of the milk and then placing it back into the farm fields uh so that the the crops uh were were feeding the cows in a closed loop. So, um, as, uh, as Webster is continuing to try and and get development on the on the Xerox campus and throughout, uh, the rest of of the town, um, you know, the very efficient waste recruitment plant, low operating costs, and renewable energy production do provide another tool uh for Webster to potentially recruit industries that are looking for that. And as we spoke to Fairlife after uh the fact there were uh there were only a few differentiators uh that that made them select Webster and uh so the the drier facility was was important to them uh along with the ability of the wastewater plant to to handle their waste.

So um there are opportunities to turn this into a benefit as you continue to try and uh develop the economy here. So, getting into uh my least favorite portion of this, but uh Paul is always ready to jump in as necessary. Um again, this uh this opportunity came originally through the inflation reduction act. Uh so there's a clean energy tax credit um that allows uh you know, entities to receive a tax credit for the construction of these facilities. And then the question then comes up, well, you know, Webster doesn't pay any taxes, so how are we going to get a tax credit? Um, one of the components of the inflation reduction act is this section 6417.

And what that did, it it said that any uh entity that does not pay taxes, municipalities, nonprofits, anything like that, uh they are eligible for instead of a tax credit, a direct payment grant uh equivalent to what the tax payment would have been for a taxpaying entity. Uh so go ahead, Paul. >> Yep. Yes. Yeah, basically it's a refundable credit. We'd be filing the renewable energy production credit form and we'd be filing a 9T for that uh year. We typically don't file a tax return, but uh we file it just to get the credit. >> Thanks, Paul. And then one of the the questions that came up was uh you know, what's the viability of this uh this program going forward uh with the change in administration?

So, uh, the recently passed, uh, one big beautiful bill, uh, which addressed a lot of the, uh, tax credits that were out there preserved, uh, this specific tax credit and also enhanced, uh, some other components of, uh, this tax credit. So, in current, uh, law and legislation and IRS rules, uh, both uh, this tax credit uh, and the components of it are still in effect. So in order to qualify that in addition to uh filing a tax form uh that that Paul mentioned is uh four basic components of the project. One is that you have to have this bio gas to energy conversion system. So you have to have either a CHP system or an RNG system and it has to be in operation.

That component of is not currently uh in the scope or in the project uh at the wastewater plant. If you do put that system in, uh, then there's, uh, the one-time payment or that refundable tax credit that Paul mentioned of 40% of, uh, the design for that system plus other eligible components, um, that are necessary to produce the bio gas. And this is the the critical component of why this becomes a a viable potential for Webster. uh in in our opinion is that there's a lot of the project that now becomes eligible for a tax credit and I'll go into detail on that in a little bit. Uh the payment application is submitted the year after the system is placed in service.

So um with our current uh calendar year, uh the earliest the system could go into service would be 2026. Um if that's the case, it could be applied for in 27 and would be delivered. If not, if it get went into service in 27, it would be 2028 before that. And the final piece of this is because of the way uh the the rules are are written, uh the project uh to be eligible or any project to be eligible for this tax credit um had to be in construction uh prior to the end of 2024. Uh so the current project of which this could be incorporated uh started in 2023. Uh, so this box has already been checked uh and puts Webster in a position to potentially get this credit.

So here's the the piece that um makes this a very interesting opportunity for Webster if if you should choose to pursue it. Um there are a number of components of the project that have already uh that are are in service or are actively in construction. Uh that includes the primary digtor, the upgrades to the existing tanks that were out there, the high strength waste acceptance facility, some upgrades to the utilities along with uh a number of uh project design and other other costs. All this adds up to about $26.8 million. Um of that $26.8 million, 40% of that would then qualify as a tax credit or grant.

So of money that you have already allocated and agreed to to commit to the wastewater plant uh 10.7 million of that could come back as uh the tax credit or the grant if you guys incorporated uh this bio gas conversion project. So again I just to summarize at the high level we've we've done our initial evaluation. So one of these two systems would meet that criteria. So either electricity and heat generation or the renewable natural gas production. Again, we've estimated the capital investment somewhere between $4 and $9 million uh on that. Um and it provides either a $100,000 cost reduction in electricity or up to $500,000 in net revenue uh from the sale of renewable natural gas.

Uh this fig these figures take out the operating costs that were not addressed uh earlier on its own. that that $4 to9 million also is eligible for the 40% tax credit. Uh so that has the potential for 1.6 to3.6 million in tax credit also. So add it oh I add it all up on the next slide. Um this is the super simple way of how it works. There's a 100 inserted steps that have to happen of course as with all things. Uh but first step is uh the permitting and interconnection phase. So agreements with RG&E uh that electricity or or renewable natural gas will be part of their system. Uh the other permits that are necessary from both the state and RG& system needs to be designed, equipment procured, ultimately installed and commissioned so that you're producing electricity or RNG.

Uh whole pile of documentation is necessary for the IRS. Um, and then as Paul noted, form 990T gets filed and in either 27 or 28, uh, the town would receive that, uh, refundable tax credit in the form of a grant. So to summarize this, we kind of looked at the worst case scenario and the best case scenario. So our definition of the worst case scenario is uh, the combined heat power system or the electricity generation. And we're also assuming that because no one could predict the future of Washington DC that somewhere in the next two years, legislation was uh passed that wiped out this tax credit and you guys were no longer eligible for the tax credit when the time came.

In that case, uh if that happened in the worst case, you would um increase uh the total project uh by $5 million. So the total bond allocation would be up to 74 million. Um the debt service would increase from 3.45 million estimated based on current rates. Those have not been finalized yet to about 3.7 million. The annual operations and savings you'd get from that system are about $100,000. So at the end you'd end up increasing the annual debt uh annual debt service plus operations by $150,000. So again, worst case, not the greatest of deals. Best case scenario, >> 50 a year. >> Yes. Yep. uh best case scenario uh the renewable natural gas system which um and assuming that no changes happen in the legislation and the legislation and rules as written today are maintained in 2027 2028 in that case there'd be an overall reduction in the amount of bond uh allocation or bond purchases that Webster has to do by about 5.3 million um the annual debt service would decrease to 3.19 million and the annual budget debt service plus operations uh would decrease by $760,000 per year uh to 2.69 million.

Uh again the operations costs are only those associated just with these two components. It doesn't include the other operations costs um at the facility. Um so that is both uh you know the the best case and the worst case uh in our early opinion of what's here. Um we uh you know Navdus and and the team at the wastewater plant we we uh received you know the uh the information related to this program. We've been studying it for the last year or so. Uh after doing the analysis of uh the current situation. We wanted to make sure that uh the town uh and the board knew the opportunity that was out there.

Uh we felt it was our duty to provide you with uh the most current information about opportunities that were out there. Um, we are we're not here to to make a recommendation or anything like that, but just merely wanted to make sure that uh you guys knew what that opportunity was. Um, and with that, I'm very happy to answer any questions uh that the board may have. >> Before we get into questions, and I'm sure that there are going to be several. Um, first of all, my head hurts. >> Okay, >> this is this is a lot to digest. Um, and I want to thank you for explaining and I just want to reiterate that you are presenting this as an opportunity, something that we could take a look at.

It's not something that we're recommending. Um, it's something that you brought um both to the supervisor and myself as less on to the sewer department a few weeks ago. And um we have always just looked at this as all right let's get some education out there and try to let everybody know where this opportunity lies and to make an educated guess perhaps at what the future holds. Um, one of the questions that I did have was if the town were interested in looking at this, would this be considered part of an energy performance contract where similar to the contract we're already in, you guarantee revenues for a certain amount of time?

>> Yes. So, in order for the this tax credit to be eligible or Webster to be eligible for this credit, it would be a continuation of the the current project because you're trying to couple the expenditures that you've already made um with uh this expenditure, package it all together, and send it to the IRS. So, it would be the same energy performance contract. Uh that being said, yes, um depending on what whether or not it was electricity generation or RNG sales, the revenue or the savings, whichever one was selected, would be part of the guarantee uh that is folded into this energy performance contract.

So it' be additive to the existing guarantees that are already part of this contract. >> Thank you. Um, the other thing that that I looked at in this is that if we were to invest $9 million and go with the renewable natural gas with what we're looking at in possible tax credit for not only that project, but for portions of the project that were already in place. We could possibly get a tax credit of 14.2 million. >> That's correct. >> So that the additional 5.2 could reduce the debt that we've already looked at for the project of phase two. >> Yes. So, the phase 2 project with the $20 million grant that you've already received from uh New York is currently bonded at about $69 million and change.

So, if the uh RNG option, the best case scenario where you invested $9 million uh was selected and implemented, at the end of the day, instead of bonding $69 million, you would bond $63.7 million. So there'd be a reduction of uh you know $5.3 million in total bond uh indebtedness. >> Depending on the timing of it, we would either borrow less um or borrow borrow a higher amount but use those tax credit dollars to pay down uh principal and interest over a period of time. We may get caught because you can only do a bond anticipation note for five years and the last year will be 2027. So we might be in a position where we have to take it to a serial bond and we wouldn't get the credit until 2028.

But we could set that money aside and the debt service fund and use that to make principal and interest payments. So it be the same effect. I also point out that um if the town decides to proceed with this uh we would be hiring a firm or firms to confirm that those components actually qualify uh in conjunction with internal revenue code presents a risk. We can say yeah we think this qualifies but we need an expert opinion on that to give us assurance before we proceed. >> Thank you. I appreciate that. Um, I have one one other question I might and then certainly I want everyone else to ask theirs.

Um, if if we were to go with a $5 million project and go to um reduced energy costs, then that which is already in place would not of the project would not be eligible. >> It would it would also be eligible. >> It would Okay. Yes. So, the the components of the project that are already under contract um would be eligible for a tax credit in either scenario. >> Okay. >> Um it's just a question of whether or not you want to do electricity production or natural gas production. >> Thank you. >> Yep. >> Um John, >> great questions, Patty. I appreciate it. And thanks for all the the work that you've done on this.

Present this to us. Obviously, this is a first time I'm having a look at this, so I'm definitely going to need more time to take a deeper dive into it. Please perhaps meet with you and Rick when I formulate additional questions. Um, which I certainly will. Um, how do you how did you measure um you came up with a percentage of excess gas. How did you measure that? >> Um, so did you estimate it? >> I'm sorry. Uh, yes. when we uh when we design the facility um we size the boiler uh to heat the digtor and to uh heat the building. So we know how much gas is going to be consumed by that boiler uh for those two needs.

So that's the one part of the equation is that that takeaway. We also uh did our design around the amount of sludge material that would be produced uh as part of the process and the amount of waste that would be showing up at the facility. Uh as Patty mentioned um that that waste is is part of the revenue guarantee uh for the project. So we know how much waste is going into the digesttor. So we know the total amount of gas that we expect to be produced. So, we took the total, knocked out the the portion that we know is going to the boiler, and that's the the split between those two. >> And weren't those conservative numbers, too?

>> Yes, those are uh as as Rick production was conservative numbers, too. So, there's an upside, >> right? But at some point when it's up and everything's up and running, you'll be able to actually measure get measurements. Correct. >> Yes. I'm sorry. So specifically um the gas leaving the digtor we have a flow measurement on that digtor gas and then the flow going to the boiler we have a flow measurement on that gas so we know exactly where that gas ultimately is is going uh when the facility is fully up and operational. >> So obviously all these numbers are used to formulate the potential revenue when you calculate that.

Correct. >> That is correct. >> Okay. Thank you. No problem. Appreciate it. >> Absolutely. That's all I had. Jenny. >> Well, thank you so much for the presentation. Like I said, you know, we need to um look at it more and to try to analyze what best um for everything. I have couple questions, but I don't know it's uh you know redundant to this or not. Um this look like we are in a phase two right now. If we were doing you know we would look into this. >> Yeah. So the the phase two goes back seven years. So, the first project that was done in 2018, um what's known as the phase one project, um which was the uh the secondary clarifiers at the facility, um phase two is the project that we're currently in.

Um so, it's either the phase two contract uh or the uh energy performance contract. Either one is a is a terminology that's been thrown around over time. >> Okay. And what will be the total cost of the total project at the end? Can you tell or no? But right now, so early to predict. >> So based on our estimates, the the total project would either be um $98 million or 90 between 95 and $98 million. Right now the project is at $89 million. Um and uh we are on time on budget on that project. Uh so this would be an additional allocation of either five or $9 million to that project. >> And what is the interest that we are paying right now so far?

>> Paul Uh the bond resolution would have to be amended. >> I think she asked what our interest rate was. >> What's our current interest rate? >> Our current interest rate. Uh well, on the short-term ban borrowing, we got a net interest rate of 2.66. On a bond, I think it'll be a little higher. So, I think probably around 3%. >> And how many millions does the town have right now in the reserve fund? And will that you know can we use those money toward this project? >> Pardon? >> How how many millions? >> Yeah. >> Uh the sewer capital reserve. >> Yes. >> Uh there's approximately 2.4 million in the capital reserve and there are additional surplus ones about 4 million in the super fun.

>> And then the second part of the question was could any of that be applied to the cost of this It could be. Sure. Could be. >> Thank you. >> It could be, but that would be risky because you'd be depleting all of those funds and not have the funds in case of an emergency, which we have several brewing out there. >> Excellent point. Mosberg pump station being one of them. Um, there's a lot of puts and takes to this. >> Absolutely. Um, my question is what would it cost? Um, Paul, you mentioned we would need to hire a firm or multiple firms to determine if this project would even qualify for this grant.

What What would the cost be just to determine if it would if we would qualify? >> Well, I think uh Natas recommended a firm called Concord and they did give us some price was it around 30,000? >> Yeah, it was between 25 and $30,000. >> And that uh that price has been factored into this budget. >> I see. Okay. >> Actually like to hire a second firm actually talk to uh to just confirm what court is coming up with then to also help with filing of the tax return to get the credits additional cost as well. And I I I think you've already had I'm sorry, Paul, you've had some preliminary discussions with them to determine whether this was even something that we should entertain the uh entertain the possibility of.

>> Correct. >> But they haven't given us a a formal opinion. >> Yeah, we need assurance. >> Yes, exactly. >> Um I do have another question. We're looking at the cost of of building it. Do we have any idea what the annual cost of maintaining this process would be and how we apply that against um our potential benefit? >> Yeah, I uh these numbers the annual operation savings or revenues factor in uh the operating and maintenance costs of a facility. They do. So, okay. Thank you. >> So, all great questions. Um, and I don't know if this is feasible or not, but would we have the ability to have one of these two firms actually do the groundwork to say yes, you would qualify, no, you wouldn't prior to giving a commitment to this is a significant amount of money.

Yes. On top of what we have already invested. So, you know, it it it's kind of a gamble, right? Um a significant gamble. >> It's a big one. >> Um so, if we could have But what you're saying is it is possible to recruit or hire um whatever these two firms are um to give us that analysis with obviously no guarantee. They may say yes. We still may not get the grant though, but we're on a better foothold as far as I'm concerned if we were to go that route to make a more educated guess. >> Yes. Uh will offer what's called a tax opinion letter. Um so that is a letter that you can take uh to a bond agency to support your bond allocation.

Uh but it's basically the opinion of someone who's qualified in the tax code as to whether or not the interpretation is appropriate. Um it is as with all things it has a cost as as Paul said it's somewhere between 25 and $30,000 for that. Um but they they are more than willing to do that. >> Generally the IRS will grandfather in projects that are already in process. Obviously, there's no guarantee that they can change the rules whenever they want, but generally that's how it's how it's worked historically. >> There actually there are current municipalities or uh entities that are receiving this tax credit already.

>> That is correct. >> Projects. >> Yes. >> All right. Once again, I will look forward to meeting with you and Rick to >> dive a little deeper into this. >> I still have another question. >> Oh, please. So, I got this time I have more than four minutes. Then going back to the going back to the puts and takes. Yes. What is the payback? What is the payback period for the $5 million option and what is the payback period for the $9 million option? >> So the $5 million option if you did not receive a tax credit. So that worst case scenario is about 90 years. >> Okay, that's bad. The payback for the best case scenario is either zero if you get the tax credit because it's already paid for fully or uh if you just did that project without the tax credit then it's about a 20-year payback >> because of the increased revenue return on RNG.

That's why I was saying puts and takes where I could if you just do the math on 9 million over $600,000 or whatever. >> You can see it's 15 >> year 15 years anywhere between 15 20 years. >> Again, as I mentioned earlier, we we did an evaluation of whether or not it made sense to do CHP or RNG when the project first started. And at that point, none of the options had a viable payback and they didn't make sense. This tax credit changed all the dynamics of that evaluation. And that's why we wanted to bring that to you because the evaluation we did originally just doesn't doesn't hold water anymore.

>> Right. Just to tie on to that, our early evaluation also, we weren't taking in all the high strength waste. We were taking in bioolids and being kind of a tipping fee in landfill for the other municipalities around here. Once we decided to go away from that and build a bigger dig and take it and then Fairlife came to town, all of a sudden this excess bio gas came to light literally. >> Yeah, >> it's lit right now. >> Could you give us you know some um example I mean the municipality that are currently have this in effect and they they you know got the grants. >> Sure. So, Navus itself um is has received uh rebates from three or two three municipalities in the Midwest.

Uh the city of Shaune uh Morgan County Schools and Fort Osage, which is in Missouri, they have all received uh tax credit grants back. And then Concord, um who's the firm that that Paul mentioned that does this tax analysis, they also assist firms, also assist municipalities with these filings. uh they have received uh projects in Georgia, Missouri, Illinois and Alabama. Um however, due to uh their uh non-disclosure agreements they have with those entities, I'm not able to to share the specific names of those places. But if you engage in a conversation with Concord uh from a as a a municipality, they would be willing to give you more details on the projects they have worked with.

So that's seven entities that I know of uh in the US and There are many more. >> Okay. Because you know that New York is a little bit complicated. So little >> Oh, I know New York is a little >> a little bit little bit. Yes. >> That could be the understatement of the evening. >> Permit to to give a sauce demonstration. So >> yes, >> heartache. >> Um I have two questions at it and is there anything else or do we want to look to wrap this up? >> No, I'm good. >> Okay. Well, if the board if decided they wanted to look into this further, talk to me about the timing that would have to happen as far as our deadlines of when the construction has to be con continuous and when it has to be completed and part of the part two phase two project.

>> Yeah. So if the board elected to move forward um construction would have to initiate on this component of the project before July the end of July uh 2026 so next year. >> Okay. >> Um the activities involved are uh the permitting um the purchase of the materials uh and the design of the system. So those are the the precursors to getting that construction to start. um that can be uh fit within the available time uh that's left between now uh and and and July and it even if uh it was the the next board that decided to take action um it could happen uh with some uh if we did it right we could make it happen uh so that uh we have the construction activity going um there's a generous definition of what continuous construction means uh in the IRS book So, uh that's really the next steps are one you guys getting confirmation from a third party that you're eligible that all the components are eligible uh the permitting and then the design of the facility >> and then um before we're looking at any kind of real true numbers is there additional engineering that needs to be done?

>> Yes. Uh there's additional engineering that needs to be done for two things. One is uh the permit applications have a certain level of engineering that is required uh so that you can demonstrate to the utility that you are protecting their systems uh as you as you inter interconnect with them. And secondly, the the design of those facilities uh and the components at the wastewater plant uh need to be designed and engineered. >> Would that be an additional fee from Navatas? I I assume that Navatas would be doing the engineering. >> Yes, that would be an additional fee. um that uh that scope and fee uh would be negotiated um and you know figured out if it made sense uh to be added into the project.

>> So that's the engineering fee is not included in your estimates. >> The engineering fee is included in the estimate. Yes. >> Sorry to Yeah, the I I didn't want to present anything but an all-in okay uh uh estimate. So the only thing that's not in there is uh you know how many if you want the fourth and fifth and sixth of opinion as to whether or not it's it's viable. >> Bob, I have a question. >> Yes. >> Um has there been talks or know how RG& would handle this because and >> it's a great question. >> Just a brief a brief thing and and we did evaluate this in Rome before we went to combined heat and power.

We looked at RG RNG and what the big kicker was on there was a huge interconnection fee of over a million dollars which shot it right out of the ballpark for us. So I'm sure that's something we would have to engage very early if this was something that we looked at is we had to get the utility on board real quick. >> Yeah, I've uh I've reached out to RG& to start the discussion. Um, knowing what other entities have gone through to make this interconnection, I'm currently carrying about a million a half dollars for the RNG extortion fee um for interconnection. Um, so >> well now now our reconnection fee just went up to 2 million.

Thank you. >> That's okay. But uh yes, so we we have factored in sort of those unknown costs as conservatively as we could. Um, you know, I I did not want to come out here and and paint this this beautiful rosy picture and have you guys walk down a road that uh doesn't make sense in the end. Uh, so trying to to put as much of of the potential costs in here without making it completely untenable. >> So that $1.5 million interconnection fee is also part of the mill. Yes, the $9 million capital. So, from a from a project completion standpoint, because I know that we're coordinating or trying to stay ahead of Fairlife for when they come online.

>> Oh, that was a softball. >> So, when this if we decide to expand this project, >> Yes. >> what positive or negative impact or will it not have any impact whatsoever on Fair Life coming online so that we're ready for them? So uh at last month when I was here talking about the construction uh the commitment we made to Fairlife was that by August 30th of this year uh we would be ready to receive their flows. The last system needed for fair life flows comes online next week on Wednesday. So at a minimum 3 days early uh at worst the day that they asked for it >> um we will be ready for their flows or we have met our commitment to fair life.

are they? But but this wouldn't affect >> all of this is additional add-on work. It does not impact the ability to treat fair life. >> Next question has nothing to do with this project. >> Okay. >> Oh, that's not fair. >> Again, I appreciate I appreciate your presentation with the realistic numbers in here. Yes. >> I look forward to meeting with you and Rick in the future, near future. >> Um, >> we're going to be ready to receive effluent from Fair Life ahead of schedule or on schedule. Yes, correct 100%. >> Will they Do you know what the latest update as to will they be sending it >> when they when we're ready?

Do you know? >> I'm going to leave that to answer. I >> can I answer that or Rick wants to answer that? >> The timeline we have right now is line number one will be sending flow to us or to the treatment plant and then to us January. >> But they're but they're testing lines and and some of that will be sent to They're sending us clean water right now, >> right? >> But it's not nothing we have to treat. But they're talking January for line one, February line two, and April line three. So full >> I'll tell you what, great great job getting that getting the phase two up and ready for fair life. And that was that's that was our goal.

>> That was our commitment, >> right? So we've met our commitment. We're going to meet it and that's fantastic. So great work on that by your whole team. >> That's all I had. I just wish there was more. It It seems like a no-brainer to do it. Like the the math and the payback is like immediate, but there's so much risk around this process or around whatever around the approvals and does it qualify, etc., etc. I guess what I would say is the whether or not it qualifies and whether or not it it you are eligible for the the credit. >> I think that risk can be very easily assuaged when you have uh some outside firms look at it who do these projects all the time.

>> There is no doubt risk in what Washington DC decides to do in the next two years. And that is risk that I don't think there's any firm that's going to sign a a letter saying that there's not going to be any changes there. That that is where the risk lies because so much of the payback is associated with that tax credit. >> I have one last question. I'm just curious when did we find out about this grant this you know um information and then why didn't we incorporate it into the phase two before you know you asking for additional for this? So the the phase 2 project um was uh basically designed during 2022 and early 2023 and uh the contract was signed and construction started in June of 2023.

The IRS put out their rules and regulations relative to this tax credit in August of 2023. So it was two months after the start of the project that they first promulgated their draft uh rules. So it it wasn't a program that existed at the time uh that the project first started. >> Okay. Thank you. >> Also, we would not have enough bio gas to make it viable anyways because Fairlife hadn't come to town yet, right? >> Fairlife is the big player that's going to allow us to produce this excess bio gas. So that's really the other um ball that dropped on this for us. >> Thank you. I don't understand how you can make decisions how they can't grandfather in the tax credits if you're making decisions on a multiple million dollar system based on a credit and then take it away.

Like I don't get that. >> I think there's a lot we don't get about >> programs from the federal government. Well, >> federal government to your point, Jennifer, is now backing out tax credits for wind and solar. that's just being announced right now. So, yeah. >> Um, I really appreciate all the questions that have been asked. I I think we're certainly better educated >> y >> than when we started 40 minutes ago. >> Um, and Bob, I want to thank you for the presentation and again for returning to town to to explain all this to us. I do want to give us at least four minutes before our our ne the actual board meeting starts.

>> Sounds good. So I I think we're not really prepared to say okay go do some more engineering and Paul check with Concord and Freed Maxic. Um let's talk a little bit more about it and uh there may be additional questions that come up. John, you said you'd like to meet with them again. I think that's great. So let's uh reconvene on this maybe in a month or so if we can get those conversations going. >> You know where to find me. >> Okay. Thank you so much. I appreciate it. And that will end the workshop tonight.