Internal Memo

TO: All Councillors

CC: Chief Executive Officer

FROM: Director Infrastructure and Property

DATE: 28 April 2020

SUBJECT: CONFIDENTIAL - Organics Processing Facility - Business Model ROI

In response to a question from Councillor Church at the closed workshops held on Tuesday, 21 April 2020
in regards to Confidential Item – Tender Organics Processing Facility 2019/144T please find attached the
following information:

• Business Model ROI relating to the Organics Processing Facility

The Confidential Item will be considered at tonight’s Ordinary Council Meeting.

Should your require any further information on this matter please contact Troy Uren, Manager Waste
Services on 0432 632 200.

Ken Liddell
DIRECTOR INFRASTRUCTURE AND PROPERTY

Attach.
Business Model ROI FY20 FY21 FY22 FY23 FY24 FY25 FY26
0 1 2 3 4 5 6

Tonnes
Garden Organics 20568 20980 21399 21827 22264
Food Organics 0 0 0 3070 6058
Total FOGO 20568 20980 21399 24897 28322

Investment
Capex - Initial Project -$ 550,000 -$ 9,200,000 -$ 14,900,000 $ -
Opex - Inc contingency for expansion $ - -$ 188,269 -$ 1,905,637 -$ 2,006,790 -$ 2,079,753 -$ 2,762,352 -$ 2,909,740

Return
Levy savings from food organics $ - $ - $ - $ - $ - $ 467,836 $ 941,639
Levy savings from garden organics if landfilled $ 2,953,565 $ 3,072,983 $ 3,197,041 $ 3,326,205 $ 3,460,655
Reduced transport costs - NOT INCLUDED $ - $ -
Bettergrow - Forecast BAU spend - $93M - NOT INCLUDED $ - $ -
Reduced landfill airspace - Food Organics @630Kg/m3 $ - $ - $ - $ 42,005 $ 82,889 $ 84,544 $ 86,241
Reduced landfill airspace - Garden Organics @630Kg/m3 $ 281,422 $ 287,060 $ 292,793 $ 298,649 $ 304,628
Sale of compost - Low Quality Value compost - $10/m3 $ - $ - $ 246,187 $ 257,899 $ 270,152 $ 247,938 $ 289,661

Discount Rate 5%
Total Investment -$75,469,279
Total Return $93,274,529

ROI 24%

Investment Real spend NPV @ 5%

Capex - Initial Project -$24,650,000 -$21,739,661
Opex - Inc contingency for expansion -$119,625,094 -$53,729,618
Total investment -$144,275,094 -$75,469,279

Return
Levy savings from food organics $ 32,561,018 $ 13,823,873
Levy savings from garden organics if landfilled $ 135,980,448 $ 67,735,380
Reduced transport costs - NOT INCLUDED $ - $ -
Bettergrow - Forecast BAU spend - $93M - NOT INCLUDED $ - $ -
Reduced landfill airspace - Food Organics @630Kg/m3 $ 2,470,642 $ 1,164,026
Reduced landfill airspace - Garden Organics @630Kg/m3 $ 9,814,267 $ 5,139,888
Sale of compost - Low Quality Value compost - $10/m3 $ 12,171,421 $ 5,411,363
Total return $ 192,997,796 $ 93,274,529

ROI 24%
FY27 FY28 FY29 FY30 FY31 FY32 FY33 FY34 FY35 FY36 FY37 FY38
7 8 9 10 11 12 13 14 15 16 17 18

22709 23163 23627 24099 24581 25609 26637 27665 28693 29721 30749 31777
6179 6303 6429 6557 6689 6910 7130 7351 7572 7793 8013 8234
28888 29466 30056 30656 31270 32519 33767 35016 36265 37513 38762 40011

-$ 3,083,566 -$ 3,203,298 -$ 3,335,577 -$ 3,849,178 -$ 4,044,020 -$ 4,307,357 -$ 4,488,896 -$ 7,354,747 -$ 4,886,907 -$ 5,089,522 -$ 5,290,720 -$ 5,507,123

$ 979,656 $ 1,019,302 $ 1,060,472 $ 1,103,217 $ 1,147,935 $ 1,209,532 $ 1,273,134 $ 1,338,797 $ 1,406,577 $ 1,476,532 $ 1,548,723 $ 1,623,211
$ 3,600,421 $ 3,745,849 $ 3,897,303 $ 4,054,664 $ 4,218,476 $ 4,482,782 $ 4,755,974 $ 5,038,300 $ 5,330,017 $ 5,631,387 $ 5,942,680 $ 6,264,172

$ 87,965 $ 89,716 $ 91,523 $ 94,543 $ 97,563 $ 100,583 $ 103,603 $ 106,623 $ 109,644 $ 112,664 $ 115,684 $ 118,704
$ 310,717 $ 316,929 $ 323,277 $ 329,736 $ 336,331 $ 350,395 $ 364,460 $ 378,525 $ 392,589 $ 406,654 $ 420,719 $ 434,784
$ 303,427 $ 317,855 $ 332,973 $ 348,790 $ 365,382 $ 390,536 $ 416,782 $ 444,161 $ 472,714 $ 502,485 $ 533,520 $ 565,864
FY39 FY40 FY41 FY42 FY43 FY44 FY45 FY46
19 20 21 22 23 24 25 26

32804 33832 34860 35888 36916 37944 38972 40000

8455 8676 8896 9117 9338 9559 9779 10000
41259 42508 43757 45005 46254 47503 48751 50000

Real spend NPV

-$ 24,650,000 -$ 21,739,661
-$ 5,732,365 -$ 6,003,250 -$ 6,246,076 -$ 6,517,491 -$ 6,796,831 -$ 7,067,802 -$ 7,348,451 -$ 7,619,376 -$ 119,625,094 -$ 53,729,618

$ 1,700,060 $ 1,779,332 $ 1,861,096 $ 1,945,418 $ 2,032,369 $ 2,122,020 $ 2,214,444 $ 2,309,716 $ 32,561,018 $ 13,823,873
$ 6,596,147 $ 6,938,895 $ 7,292,715 $ 7,657,912 $ 8,034,799 $ 8,423,699 $ 8,824,941 $ 9,238,864 $ 135,980,448 $ 67,735,380
$ - $ -
$ - $ -
$ 121,724 $ 124,745 $ 127,765 $ 130,785 $ 133,805 $ 136,825 $ 84,297 $ 86,200 $ 2,470,642 $ 1,164,026
$ 448,848 $ 462,913 $ 476,978 $ 491,043 $ 505,107 $ 519,172 $ 533,237 $ 547,302 $ 9,814,267 $ 5,139,888
$ 599,565 $ 634,674 $ 671,242 $ 709,322 $ 748,969 $ 790,239 $ 833,193 $ 877,889 $ 12,171,421 $ 5,411,363
$ -