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6.H. - Page 4 of 27 SBWMA Capital Projects Financed with the 2019 Bonds Table 2 CaDltal F'roiects ana Source OT tunas Capital Projects and Source of Funds BOD Action Project Agency Cost Payback (w/interest) 2019 MRF Sort System Upgrades $15.6M 6.3 years 2021 02E Full -Scale Project $10.OM Cost Neutral Capital Projects Estimated Costs $25.6M Agency Source of Funds Amount Status Capital Reserve $5.5M Mid -Year 18/19 Budget projected balance Bond Refunding Savings $10.OM Pending refunding of 2009A Bonds New Money Issuance $10.OM Pending issuance with 2019 Refunding Bonds Total Estimated Funds $25.5M Materials Recovery Facility (MRF) Equipment Upgrades ($15.6 million) The proposed equipment upgrades, consisting of Phase I and Phase 11, provide strong operational enhancements that will financially benefit the SBWMA for the next twelve years. The Phase I Upgrades includes three projects providing financial, commodity market, and operational enhancements: 1) Optical Sort of Small Fiber ($4.2 million); 2) Robotic Sorting of Residue/QC System ($1.6 million); and 3) Enhanced Glass Cleanup System ($684,000). The Phase II Upgrades consist of six -optical sorters to be installed in place of some sort labor to significantly upgrade mixed paper to High -Grade paper and recover additional recyclables. Phase I Upgrades are designed to be installed prior to Phase II so that the improvements in commodity quality can be assessed in the final design of Phase II Upgrades. Table 3 below shows that the financial benefit over the 12 -year useful life of the equipment is estimated to be $29.6 million, resulting in an estimated net financial benefit of $14.1 million (including equipment interest expense). The financial benefit is achieved through increased commodity capture (new revenue) and reduced labor expense. New revenue will be increased by improving commodity material sorting efficiency and accuracy, resulting in higher -grade material that can be marketed at its maximum value. Manual sort labor expense will also be reduced by installing high efficiency optical and robotics sorting systems. In addition, the equipment will increase the plant's throughput of materials, achieve increased fire risk mitigation, and protect from landfilling paper. A detailed description of the MRF Equipment Upgrades, associated benefits and third -party justification can be found in Attachment 2 — February 2019 Board of Directors (BOD) Presentation on MRF Processing Equipment Upgrades. Table 3 City of Redwood City 1017 Middlefield Road, Redwood City, CA. 94063 Tel: 650-780-7000 www.redwoodcity.org 191