The county decided this week to terminate its contract with the developer and operator of the Tajiguas Landfill ReSource Center.
The county had a contract with MSB Investors to construct and operate the ReSource Center’s material recovery facility, anaerobic digestion facility, and compost management unit since 2016. The Board of Supervisors voted Tuesday to terminate it.
“It is unfortunate that we are here today,” said Walter Rubalcava, Public Works deputy director of water resources. “This type of hearing is not common for our department. As a matter of fact, it is the only termination of a large-scale contract that our leadership has ever requested.”
Public Works staff said that MSB Investors failed to complete development of the project by the agreed date and failed to pass acceptance tests, which led to violations issued by multiple regulatory agencies — such as the Santa Barbara County Air Pollution Control District and the Central Coast Regional Water Quality Control Board.
County staff also said that MSB Investors did not pay about $5.9 million owed to subcontractors or about $3.7 million in assessed liquidation damages. They also said the company failed to maintain a safe site for employees and visitors, adding that “inadequate safety measures were the cause of the May 12, 2022 compost fire that led to equipment damage and pause of composting activities.”
Outstanding violations and non-payment of fees owed to regulatory agencies also interfered with the county’s ability to obtain permits for other projects, according to Public Works.
The anaerobic digestion system — which processes organic material — generated about 0.9 megawatts of energy from biogas last fiscal year, less than half of what should be generated, ReSource Center Project Leader Carlyle Johnston said.
Additionally, only about 640 tons of finished compost were produced through the compost management unit last fiscal year.
“This is well short of the 16,000 tons that would be generated if properly operated,” Johnston said. “The anaerobic digestion facility and compost management unit are only achieving half of the diversion needed in order to fully pass acceptance and complete commissioning.”
Jessica Diaz, an attorney representing MSB Investors, said that there is uncertainty when predicting recycling revenues, and that there has been a recycling revenue downturn. She added that the county would not increase the tipping fees enough to make up for this reduced revenue.
“Both sides of this public-private partnership want the ReSource Center to be a success — a success for the rate payers, a success for the community, and a success for the environment,” Diaz said.
During its meeting Tuesday, the Board of Supervisors said it could not move past the violations and several years of complaints regarding the contract.
“I don’t see how the county’s patience could continue past regulatory violations, past continuing to not pay (subcontractors), and what hangs in the balance is our ability to meet our greenhouse gas reduction goals,” Supervisor Das Williams said.
The Board of Supervisors voted unanimously to terminate the contract.
County staff said that the termination is effective immediately with a period of 180 days for transition services, while a new long-term agreement is developed with MarBorg and Bekon Energy Technologies, Inc. for operating the landfill facilities.