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1995-06-07 ARRA PacketAGENDA Regular Meeting of the Governing Body of the Alameda Reuse and Redevelopment Authority Alameda High School Cafeteria West Wing Corner of Central Avenue and Walnut Street Alameda, CA Wednesday, June 7, 1995 5:30 p.m. IF YOU WISH TO ADDRESS THE AUTHORITY: 1) Please file a speaker's slip with the Secretary, and upon recognition by the Chair, approach the rostrum and state your name. Speakers are limited to three (3) minutes per item. 2) Lengthy testimony should be submitted in writing and only a summary of pertinent points presented verbally. 3) Applause, signs or demonstrations are prohibited during Authority meetings. ROLL CALL A. Approval of Minutes - Special Joint Meeting of May 3, 1995. II. AGENDA ITEMS A. Report from Bill Norton, Current Executive Director, Regarding the Designation of the Executive Director for the Alameda Reuse and Redevelopment Authority, Ms. Kay Miller. (NO ACTION NECESSARY B. Report from the Executive Director Recommending Endorsement of the Ultimate Aerospace Refinishing Company (UARCO) Interim Reuse Proposal and Authorization for the Executive Director to Negotiate with the U.S. Navy and UARCO Concerning Lease Rates, Terms and Conditions of a Master Lease, and Sublease Respectively with the Alameda Reuse and Redevelopment Authority (ARRA). / C. Report from the Executive Director Recommending the Alameda Fleet Industrial Support Center (FISC) Annex Come Under the Jurisdiction and Control of the ARRA, and Transmission of a Request from the Alameda Base Reuse Advisory Group (BRAG) to have the BRAG be the Advisory Group for FISC as it Has Been for the Alameda Naval Air Station. D. Report from the Executive Director Recommending Approval of BRAG Reporting Function to the Alameda Reuse and Redevelopment Authority. Endorsed by Alameda City Council Cad April 18, 1995, Meeting. N. V. E. Report from the Executive Director Recommending Endorsement of the Environmental Aqua Services, Inc. Proposal For an Interim Use to Develop and Operate a Business at the Naval Air Station (NAS) Alameda for Environmental Clean -up for the Remediation of Soil and Groundwater Contamination and Authorization for the Executive Director of the Alameda Reuse and Redevelopment Authority (ARRA) to Negotiate and Execute a Lease with Lease Rates, Terms, and Conditions with the U.S. Navy and Environmental Aqua Services, Inc. for the Use of Buildings and Facilities at NAS Alameda. F. Report from the Executive Director Recommending Support for SB 1180 Relating to CEQA Reform for Military Base Reuse Plans. G. Report from the Executive Director on the Request from the Arms Control Research Center for the Use of Buildings and Facilities at NAS Alameda for the Bay Area Ship Recycling Complex ( BASRC) and Request for $50,000 as a Grant or Contract or In -kind Services for Preparation of the BASRC Detailed Business Plan. ORAL REPORTS A. Oral Report from the Executive Director on the Status of Utility Transfers. B. Oral Report from the Executive Director on the Status of the CALSTART Lease. C. Oral Report from the Executive Director Regarding the Status of Alameda Unified School District's (AUSD) Public Beneficial Conveyance Proposal. D. Oral Report from the Executive Director on the Funding Status for the NAS Alameda Sewer Forced Main Improvement Project. E. Oral Report from the Executive Director Updating the Reuse Authority on Reuse Authority Staff Activities and the Next Agenda for the Alameda Reuse and Redevelopment and Authority. F. Oral Report from the Chair of the Base Reuse Advisory Group (BRAG) Regarding BRAG Activities. ORAL COMMUNICATIONS, NON - AGENDA (PUBLIC COMMENT) (Any person may address the Governing Body in regard to any matter over which the Governing Body has jurisdiction or of which it may, take cognizance, that is not on the agenda.) COMMUNICATIONS FROM GOVERNING BODY VI. ADJOURNMENT Note: * Sign language interpreters will be available on request. Please contact Elizabeth Brydon, ARRA Secretary, at 263 -2870 at least 72 hours before the meeting to request an interpreter. * Accessible seating for persons with disabilities (including those using wheelchairs) is available. * Minutes of the meeting are available in enlarged print. * Audio Tapes of the meeting are available upon request. * * * * * Alameda Reuse and Redevelopment Authority Inter - Office Memorandum May 26, 1995 TO: Honorable Members of the Alameda Reuse and Redevelopment Authority FROM: William C. Norton Alameda City Manager RE: • Designation of the Executive Director for the Alameda Reuse and Redevelopment Authority Background: On April 5, 1994, the City of Alameda and the County of Alameda both approved the formation of the Alameda Reuse and Redevelopment Authority (ARRA) through a Joint Exercise of Powers Agreement for the purpose of establishing a public entity for assuring the effective transition of the Alameda Naval Air Station from federal ownership to local ownership. The Joint Exercise of Powers Agreement provides for the designation of the Executive Director for the Alameda Reuse and Redevelopment Authority. Discussion/Analysis: Pursuant to Section IX.C.1. (Finances - Personnel) of the Joint Exercise of Powers Agreement, the Alameda City Manager or his /her designee shall serve as the Executive Director of the Authority, and shall be responsible for the administration of the ARRA through contract with the City of Alameda. On May 15, 1995, Ms. Kay Miller was designated by Bill Norton, Alameda City Manager and current Executive Director of the ARRA, as the new Executive Director for the Alameda Reuse and Redevelopment Authority. Budget Consideration /Fiscal Impact: None. Recommendation: No action is necessary. Respectfully submitted, William C. Norton Alameda City Manager /eb Alameda Reuse and Redevelopment Authority Inter - Office Memorandum May 31, 1995 TO: Honorable Members of the Alameda Reuse and Redevelopment Authority FROM: Kay Miller Executive Director SUBJ: Report from the Executive Director Recommending Endorsement of the Ultimate Aerospace Refinishing Company (UARCO) Interim Reuse Proposal and Authorization for the Executive Director to Negotiate with the US Navy and UARCO Concerning Lease Rates, Terms and Conditions of a Master Lease, and Sublease Respectively with the Reuse Authority Background • UARCO has submitted a reuse proposal utilizing buildings 24 and 25, the Paint Hangar and Corrosion Control Hangar. UARCO will be an employee owned company primarily composed of former Naval Aviation Depot workers. Building 24, the Paint Hangar, is a 63,000 square foot facility and the building 25, the Corrosion Control Hangar, is a 54,450 square foot building. Discu ssionLAnaly sis� UARCO is interested in using Buildings 24 and 25 to provide depainting via chemical stripping, plastic media blasting, or sodium bicarbonate blasting methodology and to provide painting services. They will occupy approximately 117,450 square feet of floor space including offices in both Buildings 24 and 25. One of their prime customers will be AEG who would require the services of the paint facility and corru lion control facility two to three times a week. The AEG proposal is tied very closely to being able to contract out painting and stripping requirements to the operator of building 24 and 25. UARCO anticipates being able to begin business by the last quarter of 1995 and employing over 100 people, mostly former NADEP workers. Honorable Members of Alameda Reuse and Redevelopment Authority Financial Impact /Rud •• •- • •• May 31, 1995 Page 2 Negotiation with UARCO on the use of facilities at NAS Alameda will have no impact on existing ARRA funding. Recommendation: Staff recommends the Alameda Reuse and Redevelopment Authority favorably endorse the proposal by UARCO to perform as a painting and corrosion control company using buildings 24 and 25 at NAS Alameda. Additionally, staff recommends the Alameda Reuse and Redevelopment Authority authorize the Executive Director to negotiate with the US Navy and UARCO both lease rates and terms and conditions of a master lease and sublease respectively for UARCO to occupy Buildings 24 & 25 at NAS Alameda. Respectfully submitted Kay Miller Executive Director KM /erb Attachment: UARCO Proposal ABSTRACT Ultimate Aerospace Refinishing Company (UARCO) proposes to establish an refinishing business at NAS Alameda. UARCO intends to utilize two of the NADEP buildings located at NAS Alameda with operations beginning in 1996. UARCO would occupy buildings 24 and 25, the paint hangar and the corrosion control hangar. The stated purpose of UARCO would be to "provide depainting and refinishing of aerospace vehicles (fixed and rotary wing), large construction vehicles, roadway as well as rail transit vehicles, large over the road cargo vehicles, and large components of the aviation or transportation industry." UARCO's attached business plan/proposal contains financial date to assist in the decision making process. This would be an employee owned and operated company. UARC03/RLM Robert L.Mixon, President/CEO Ultimate Aerospace Refinishing Co. 909 Marina Village Parkway Suite 211 Alameda, Ca. 94501 Base Reuse Authority City of Alameda Building 90 NAS-ALAMEDA, CA. 94501-5012 5 February 95 PROPOSAL FOR REUSE OF FACILITIES-NAS/NADEP ALAMEDA REF: Aircraft Corossion Control Facility, Bldg 25 Aircraft Paint Facility, Bldg 24 The present employees, employed at the NADEP-ALAMEDA facilities referenced above, have joined together, and have organized this company with the intent of doing whatever is necessary to retain these facilities, and provide services that these facilities were originally intended. This company will be incorporated within the state of California. Within the first five years of its existence it will be fully employee owned. REUSE/BUSINESS PROPOSAL: Ultimate Aerospace will provide depainting via chemical stripping, Plastic Media Blasting (PMB), or Sodium Bicarbonate Blasting methodology for any and all contracted aerospace vehicles , large cargo vehicles, transit vehicles, or track transit vehicles. The experience and expertise of the employees performing these services is second to none in the United States. This organization will also paint any of the above listed items within the customers specifications, and provide a year of field service for touchup or any coating failure repair without cost to our customers. I feel that this project is in conjunction with community plans, and will serve as a magnet to other potential businesses. As you are already aware of AEG's proposal to renovate the BART transit vehicles, and the key phase of that project will require the services of UARCO. There has been constant concern by all of us as to what the job market will hold for us, but we realize that this may be a blessing in disguise. We have an opportunity to prove what American ingenuity is all about, and how to take a negative and turn it into a positive. We can demonstrate how Base Closure decisions don't have to be catastrophic to the workers and the community economy. We have completed our primary Marketing Survey, and have set a target deadline of 30 September 95 for completing a formal marketing survey by an independent Marketing Firm. I am providing you a copy of our Business Plan, and I request that you preserve the confidentiality of it due to it being of a highly business sensitive nature. Previously, you alluded to the need of assuring your office as well as EDAW of our ability to run a business, and requested an outline of a manual of operations. I have enclosed that information, and I hope all other interested parties are required to do likewise. I appreciate your help in this process, and we hope that this proposal receives approval so as to give us the opportunity to proceed in expending the necessary capital for incorporating, retaining legal counsel, hiring a marketing and advertising firm, and move to obtain financing from sources that have already expressed an interest in our project. We do however have some concerns relative to Interim Leasing, and what the status is of that plan, and what rights will be given to those leasee's once NAS is officially turned over to the community. It is difficult to make long-range plans, and enter into long-term contracts with our clients if we don't have any firm grasp upon future lease options. We are committed to make this project a success, and something more of a reality rather than a dream. We stand prepared to make a formal presentation after giving your committee sufficient time to digest our proposal. We ask that you send us any questions that you may have, and we will respond to any q ions during our formal presentation to The BRAG. ROBERT L.MIXON PRESIDENT, CEO BUSINESS STRUCTURE As previously stated this will be an Employee Owned Corporation, and consisting of 97% Minority Employees/Shareholders. We will require numerous licenses and permits such as: Contractors Licenses, Business Permit, which will be requested before 1 November 95. See Tab A for Organizational Chart. PROPOSAL Our proposed start-up date is projected to be January 96, and our expected life of business will be predicated upon the market, but we project to be in business for at least 20 years, or as long as the market has a desire or need of our services. PERSONNEL A. Currently there are 48 employees that are assigned to The Aircraft Final Paint Branch who have cognizance over both Buildings 24 & 25. At peak production periods there was 120 employees gainfully employed. B. The staffing is comprised of personnel living in Oakland, Richmond, Berkeley, San Pablo, San Leandro, Martinez, Bay Point, Pittsburg, and Fairfield. C. The employees will be all civilian, and with funding, licenses, and permits operational January 96. Alameda, Hayward, necessary D. We are projecting hiring a maximum of 110 employees, 97% of which will come from the roster of NADEP-Alameda and NAS ALAMEDA. The Remaining 3% will be Facilities Maintenance/ Industrial Waste Treatment Plant Operators from OAKLAND PWC rosters that currently maintain and have expertise in these facilities. E. Information requested here relative to position descriptions, wages, and salaries, etc.... will be provided at a later date. The enclosed Business Plan has an Organizational Chart in the Appendix from which you can gather trades that will be employed as well as numbers of employees. Initially, we will be contracting our employees through Lear Siegler. F. See Business Plan FACILITIES/EQUIPMENT A. See Business Plan B. Buildings Building Numbers 24 & 25 Corossion Control Facility, and Aircraft Paint Bldg, and Both Industrial Waste Treatment Plants at 24 & 25. BUILDING 24 Square Footage 63,000 Sq. ft. BUILDING 25 Square Footage 54,450 Sq. ft. Current Function Retain Function Aircraft Painting Same Depainting/PMB Same C. These Facilities are not dependent upon any other facilities, however we will have to install air compressors at both facilities sufficient enough to provide constant 100 PSI air pressure. The only other facility that may have an affect on this proposal is the length of time which the airfield will remain operational, but the success of this venture does not revolve around the maintenance of the airfield. D. The current Facility is owned by the DOD, and is in the custody of NADEP-ALAMEDA. E. Capital improvements required will be none, except what was stated in C. above. The cost for the adequate size compressors to include installation is $8K.. The cost will be paid by the Corporation if this project is approved. F. The quantity of airfield use will be determined by the workload, and type, which is yet to be determined, however UARCO will not be dependant upon the existance of the airfield. G. Port facilities? Currently we do not foresee the use of any Port facilities unless a significant change occurs in the NAVY's plan to relocate its carriers and support ships. H. Negative I: All of the Equipment currently in those two facilities will be utilized in this project, but we are prepared to make capital equipment purchases if necessary. 5. FINANCIAL INFORMATION UARCO will be seeking to obtain a loan in the amount of $1.1M initially if the project is approved. We will have core workload contingent upon AEG's project to renovate the BART vehicles. ENVIRONMENTAL INFORMATION A. Level of clean-up required for occupancy: None B. Required environmental approvals: Air Emissions - BAAQMD, Water Discharge Permits - EBMUD, Employee Safey and Health-CAL OSHA, Department of Health Services, and any permits that may be required by Environmental Protection Agency in regards to Hazardous Material. Permits are currently in place and will/can be reissued to using entity. Revisions in quantities and types of material to be used in the paint facility will be required dependent upon projected volume of work. C. Potential impact of proposal: Low The facilities have been permitted previously, and all the environmental impact studies were completed prior to construction of both facilities. D. Noise Levels: The work performed at these facilities are inside and there will be no noise pollution either day or night of any significance. There may be a noise factor which will be analyzed for incoming/outgoing aircraft, but less than the degree currently experienced. 7. SUPPLIER/MARKET INFORMATION A. Suppliers COATINGS Ameron Protective Coatings 3583 Investment Blvd. Building D. Suite 1 Hayward, Ca. 94565 Courtaulds Aerospace 1608 Fourth St. Berkeley, CA. 94710 Sherwin and Williams Co. 5815 Shell Mound Rd. Emeryville, Ca. 94608 Crown Metro Aerospace (Dexter Aerospace Materials) 2850 Willow Pass Road Bay Point, Ca. 94565 DEFT Inc. 17451 Von Karman Ave. Irvine, Ca. 92714 Sherwin Williams Co. 101 Prospect Ave. N.W. Cleveland, OH. 44115 AKZO Coatings Inc. 434 W. Meats Ave. Orange, Ca. 92665 Cee Bee Konverkote 9520 E. Cee Bee Dr. Downey, Ca. 90241 Products Research Chemical 5430 San Fernando Rd. Glendale, Ca. 91209 Everseal Manufacturing Co. 475 Broad Ave. Ridgefield, N.J. D.J. Simpson Co. 111 So. Maple Ave. So. San Francisco, Ca. 94080 Co. AmChem Products Inc. 300 Brookside Ave. Ambler, Pa. 19002 STRIPPERS/BLAST MEDIA/ABRASIVES Abrasives Unlimited Inc. 1941 West Avenue 140 San Leandro, Ca. 94577 3M Industrial Tape Div. 1241 E. Hillsdale Blvd. Foster City, Ca. 94401 Fine Organics Corp. 5045 Discovery Point Byron, Ca. 94514 E.Z. GO Textron 23481 Conneticut St. Hayward, Ca. 94545 US Technology Corp. 220 7th Street S.E. Canton, OH. 44702 Industrial & Foundry Supply Co. 8707 San Leandro Oakland, Ca. 94621 Smith Industrial Supply Co. 2523 Grant Avenue San Leandro, Ca. 94579 R.S.Hughes Co. Inc. 7303 Edgewater Dr. Unit B Oakland, Ca. 94621 Triangle Coatings 1930 Fairway Dr. San Leandro, Ca. 94577 TURCO Products P.O. Box 4754 Anaheim, Ca. 92803 Mandalay Services 5045 Discovery Point Byron, Ca. 94514 Equipment/Tooling New Sprayer Technology Co. 1950 Burroughs St. San Leandro, Ca. 94577 GRACO Inc. 3165 S. Garfield Ave. Los Angeles, Ca. 90040 Binks Manufacturing Co. 1459 San Mateo Ave. S.San Francisco, Ca. 94080 Barker Tool & Supply Co. 2123 Bering Dr. San Jose, Ca. 95131 Fischer Air Supply Inc. 2674 Nicholson St. San Leandro, Ca. 94577 DeVilbiss/Ransburg Coating 1700 211th Way N.E. Redmond, WA. 98053 Industrial Technologies Of California 43070 Christy St. Fremont, Ca. 94538 SAFETY EQUIPMENT AND SUPPLIES E.D. Bullard Co. 2680 Bridgeway Sausalito, Ca. 94965 Industrial Safety Supply 4041 Hollis St. Emeryville, Ca. 94608 Witzei Associates Environmental Safety Products 428 De Sola Terrace Corona Del Mar, Ca. 92625 Other: Mine Safety Appliances Co. 1775 North Surveyor Ave. Simi Valley, Ca. 93063 B. Market A preliminary Marketing Survey was conducted of commercial airlines, Department of Defense Agencies, Bay Area Rapid Transit (BART), private aircraft owners, The Air National Guard Bureau, and other governmental agencies that will require services that we propose to provide. Funds necessary to complete a formal marketing survey will be expended as soon as UARCO obtains a committment from the BRAG on the proposal submitted. Type of Client: See Business Plan NAS based clients: Possibly some residual Government Work upon closure if put out for bid. Local Clients: AEG has expressed some interest in our performing some strip and paint operations on BART vehicles if they are awarded the contract. This would be a substantial beginning for a new company such as UARCO. UNC Aviation Company, has also inquired as to when we will be available to commence strip and paint operations for some aircraft that they will have available, and some military vehicular work. Other: Client visits per period:To Be Determined FOR THE BELOW REQUESTED INFORMATION SEE THE BUSINESS PLAN C.Annual dollar volume sales:_See income sumary statement. Estimated local tax amount generated: 8. INFRASTRUCTURE REQUIREMENTS A. UTILITIES (estimated annual usage) Electricity_ _2427 KWH (est)_ Special Requirements Gas: 38437.00 BTU Special Requirements Water: 265000 GAL Special Requirements Sewerage: 1 844 KGAL Special Requirements Compressed Air Special Requirements _It should be noted, that the figures that are supplied above are NADEP-ALAHEDA figures, and have found that those figures are inflated due to other facilities utilities were charged into the annual usage figures for both areas. There will be a total elimination of the compressed air charges for both facilities due to the projected expenditure to purchase compressors to supply necessary air volume. The water recycling project for both buildings will reduce water consumption by an estimated 51%. B. Roadways (TO BE DETERMINED) Which types of roads needed: city streets as is/no significant increase over what is currently experienced. Vehicle type_TRUCK/SEMI Average tonnage/trip: Average trips/month Vehicle type: Average tonnage/trip: AVG trips/month Vehicle Type Avg tonnage/trip: Avg Trips/month Vehicle Type Avg Tonnage/trip: Avg Trips /month 0 t h e r N A businesses/operations Type of interaction/usage 9. TECHNOLOGY a.TYPE OF TECHNOLOGY: This Employee Owned Corporation will provide state of the art aerospace as well as vehicular stripping, and painting services. We also plan to offer a training school to cover the needs of clients who require a short term of instruction for in the field corossion control functions. This will be primarily offered to the military services, and vocational schools that don't have facilities to conduct such training. The aerospace industry due to the astronomical construction costs associated with constructing such facilities have expressed a dire need for the services Ultimate Aerospace will provide. Due to the size and scope of services that our Company can provide we are diversified enough to extend past the realm of aerospace vehicles to large surface vehicles. We also have to sieze the opportunity to obtain a lion's share of US Government contracts for depainting, corossion removal, and painting military aircraft and vehicles. Under the cog of The SBA Section 8A, in reference to disadvantaged minority businesses we will receive the full benefits of the provisions of that program. B. RELATED TECHNOLOGIES New and improved depainting technologies such as Laser Stripping. and the implementation of Robotics in topcoat application will be future projects of this business. We want to do some studies of solar/wind energy generation in providing power for the buildings, and do some water conservation projects for both of the facilities. C. SUPPORT TECHNOLOGY REQUIRED We plan to utilize the skills of some of the specialized and technical professionals currently employed by NAS-ALAMEDA, NADEP-ALAMEDA, and PWC to fulfill staffing requirements to fulfill our technology base. Accountants, Contract Experts, Planners & Estimators, Maintenace Personnel, and other positions will be developed as determined by The Board of Directors of The Corporation. D. POTENTIAL MAGNET FOR OTHER TECHNOLOGIES This project will be a support source for any manufacutring companys such as CALSTART etc. who will require painting of its electric vehicles via conventional means or paint infusion. E.Relationship with Lawrence Livermore Laboratory or current NAS- based technology support:_None 10. POTENTIAL MAGNET FOR OTHER BUSINESSES/TYPE SEE BUSINESS PLAN 11. HOUSING NOT APPLICABLE 12. ATTACHMENTS (UARCO BUSINESS PLAN AND COVER LETTER) 13. OTHER AGENCY REVIEW Have any other agencies/groups reviewed this proposal? A copy of this project is being supplied as informational copies to The Hayor Alameda and The City Council, The Hayor of Oakland. The Board of Supervisors, Senator Feinstein's Staff, and the Office of Congressman R. Dellums, and a copy will be presented to Governor Wilson's staff. ALAMEDA BRAG COMMITTEE: ACTIONREQUESTED: DATE SENT: due back ALAMEDA BRAG COMMITTEE: ACTION REQUESTED: DATE SENT DUE BACK EBCRC COMMITTEE: ACTION REQUESTED: DATE SENT: DUE BACK UARCO Sening DOD, Aerospace, Sea/Land Transportation and Other Industries BUSINESS PLAN ULTIMATE AEROSPACE REFINISHING COMPANY 1996 -2001 BY ROBERT L. MIXON Jr. JANUARY 30,1995 SUBJECT TO REVISION 1996 - 2001 Business Plan Ultimate Aerospace Refinishing Co. UARCO Table of Contents Page CONFIDENTIALITY STATEMENT 1 EXECUTIVE SUMMARY 2 Business Description 3 Current Position and Future Outlook 3 Management and Ownership 4 Uniqueness and Differentiation 5 Funds Sought and Usage 5 Monthly Operational Cost - Initial Start -up 5 Financial Summary 6 Loan Retirement 6 OBJECTIVES 7 STRATEGIES 7 PRODUCT AND SERVICE 8 Pricing Objectives 10 MARKET RESEARCH AND ASSUMPTIONS 11 MARKET OVERVIEW AND SIZE 11 MARKET SEGMENTS 11 CUSTOMER PROFILE 12 COMPETITION 13 MARKET SHARE 13 GEOGRAPHIC MARKET FACTORS 13 BARRIERS TO MARKET ENTRY 14 MARKETING S'I"RATEGIES 14 OPERATIONAL PLANS 15 Sales Forecast 15 Product Positions And Forecasts 15 Advertising And Promotions 16 Community Relations 16 SUPPLIERS 16 BUYING,SUPPLY AND STOCKING PLAN 17 FACILITY PLANS 17 ADMINISTRATION PLANS 17 EMPLOYMENT AND PERSONNEL PLANS 18 FINANCIAL PLANS 18 APPENDIX 19 Page 1 1996 to 2001 Business Plan Robert L. Mixon Jr. Ultimate Aerospace Refinishing Company UARCO CONFIDENTIALITY STATEMENT The information, data and drawings embodied in this business plan are strictly confidential and are supplied on the understanding that they will be held confidentially and not disclosed to third parties without the prior written consent of Ultimate Aerospace Refinishing Company. Page 2 1996 to 2001 Ultimate Aerospace Refinishing. Company EXECUTIVE SUMMARY Company Name: Contact: Address: Telephone: Ultimate Aerospace Refinishing Co. Rob Mixon, President, CEO 909 Marina Village Parkway, Suite 211 Alameda, Ca. 94501 (510) 263 -8450 Residence 439 -8961 BUSINESS DESCRIPTION Business Plan Robert L. Mixon Jr. UARCO Ultimate Aerospace Refinishing Co. (UARCO), will provide the highest quality depainting, corrosion removal, and painting services from its "state of the art" environmentally compliant strip and paint facilities located in Alameda California. (Formerly, The Naval Aviation Depot - Alameda, at The Naval Air Station - Alameda, Ca. 94501) The location of these facilities will and can service the entire West Coast Region as well as the entire Continental United States in the depainting and repainting of large and small commercial/private aircraft. (Fixed and Rotary Wing Aircraft), rail transit vehicles, large road transit vehicles and containers, large construction equipment, various sized sea shipping containers, and military vehicles. UARCO will also provide training to military personnel in the performance of corrosion control methodology for field and at sea operations. The Aerospace Industry has felt a gigantic void on the West Coast especially in California for the stripping and repainting of aircraft due to the stringent environmental rules and regulations established by the state, local air quality management boards, and the Environmental Protection Agency. (EPA) This EPA award winning facilities, and the highly trained/skilled employees will fill that void. UARCO was founded by production managers formerly employed by The Naval Aviation Depot - Alameda, whose expertise lay in the corrosion control field in August of 1994. The company will be a Joint Partnership, which will as soon as financially practical convert to an Employee Owned Corporation. Page 3 1996 - 2001 Business Plan Robert L. Mixon Jr. Ultimate Aerospace Refinishing Company UARCO CURRENT POSITION AND FUTURE OUTLOOK The business through its past affiliation with the military community has established itself as a producer of high quality products, and is noted for its great attention to detail. The CEO, and General Partners have extensive knowledge in the field of stripping, abrasive blasting, plastic media blasting (PMB), sodium bicarbonate blasting of composite /fiberglass surfaces, and painting using the highest transfer efficient equipment available. (Graco Plural Component Ratio Units and Electrostatic Spray Technology.) The market need for aircraft painting is astronomical specially due to the unavailabilty of large facilities to handle more than one aircraft at a time. UARCO will occupy two leased facilities. The Stripping and Corrosion Control Facility are 54,540 square ft. composed of three bays, designated for chemical stripping, dual purpose bay for chemical stripping and blasting, and a Plastic Media Blasting Bay. The Painting Facility has 63,000 Square Ft. of space, containing three painting bays. The two large painting bays measure 137'4 "W x 154'0 "L x 42'6 H, and the small bay measures 137'4" W x 950 "L x 33'3 "H. The company plans to reach $5.17M per year within the first year of operation. The long range projection for the company is to reach $7.5M per year within five years. UARCO will achieve this goal by expanding its market to a broader sector of the Country, and Foreign Countries as well. INFRASTRUCTURE The Aircraft Stripping Facility (Bldg 25) is supported by three other structures a Boiler Room (Bldg 622), An Industrial Waste Treatment Facility (Bldg 25A), a Plastic Media Baghouse and Compressor Room located in the rear of the facility. A Stripper storage Farm is located in the rear of Bldg 25, but is currently inoperable due to faulty design. The Aircraft Paint Facility, (Bldg 24) is supported by Bldg 24A) which is the Industrial Waste Treatment Plant which treats the effluent generated in Bldg 24. Bldg 24 also has a fire pump house which is detached from the facility located on the south side of the building. Page 4 1996 to 2001 Business Plan Robert L.Mixon Jr. Ultimate Aerospace Refinishing Company UARCO MANAGEMENT AND OWNERSHIP UARCO will operate as a Joint Partnership. The company will be comprised of displaced Federal Workers affected by 1993 Base Closure and Realignment Commission whose decision closed The Naval Air Station - Alameda, and The Naval Aviation Depot - Alameda. The employees of UARCO are all trade certified, and have numerous years of expertise in the field of stripping, blasting methodology. corrosion removal, and painting. The Senior Staff Engineer and his Building Maintenance experts are former PWC maintenance persons who have maintained these two facilities since their construction. Bldg 24, Paint Facility, completed construction in 1991, and was occupied in April of 1991. Bldg 25, The Corrosion Control Facility completed construction in 1988, and was occupied in 1990. UARCO's Chief Executive Officer is Robert L.Mixon who had the idea, and got the employee support to forge ahead with the formation of UARCO. Mr. Mixon (48), has been the leader, and General Foreman of this work area for eight (8) years Mr. Otis Wicks (51), Vice President, and Director of UARCO Plant Operations has worked in the Corrosion Control Field for twenty -seven years and served as a first line supervisor for the past 15 years. Ms. Denise McCutchen (37), Treasurer, and Interim UARCO Comptroller has had extensive training in all fields of Corrosion Control work, and has been a first line supervisor for ten years. She is currently attending Laney Community College in pursuit of a degree in nursing. Denise's accounting skills and knowledge of financial accounting procedures, and tax matters is of integral importance. Mr. Martin Storie, Marketing and Sales, has been in the Aerospace Paint Trade for nineteen years, and has spent many xveeks on the road in his capacity as a Section Head, meeting with customers, satisfying grievances they may have with the product and super- vising teams performing corrosion work in the field. Mr, Philip Byrdsong, currently serving as Executive Assistant is the resident Union Negotiating Expert, and has been a Union representative of IAM for ten years, and is an aircraft painter. Mr. Byrdsong's drive, and initiative complements the business. UARCO will be hiring Production Coordinators to manage shop operations as we get underway. Page _5 1996 - 2001 Business Plan Robert L.Mixon Jr. Ultimate Aerospace Refinishing Company UARCO UNIQUENESS AND DIFFERENTIATION UARCO differentiates itself by meeting the aerospace and transit industries need for a facility within a reasonable geographical distance, of ample enough size to handle large items, short turn-a -round time, and excellent performance as to schedule and quality. This company can serve as a model for other communities that are met with Base Closures, that have an impact on the job rate as well as the economics of the area. UARCO will use the highest quality products to accomplish their tasks, and that will have a positive impact on the local economy, 95% of the suppliers are either local or in California. The environmental compliance of these facilities will also bolster UARCO's ability to attract large scale contracts in the Government sector as well as in the private sector, where a combination of depainting and painting is required. Normally a customer requiring these services must deal with two separate businesses. UARCO has the technological expertise to perform work in house as well as in the field, and we will provide our customers warranties on work accomplished, and no other competitor can offer the same range of service, nor the excellent warranted product. FUNDS SOUGHT AND USAGE The business is seeking an Open End Line of Credit up to a $1.1M limit secured by a combination of Accounts Receivable and $1M in equipment assets. This amount is required to cover initial start -up expenses, and the first quarter of operating costs listed below: MONTHLY OPERATIONAL COSTS LEASE, INSURANCE, UTILITIES, BLDG MAINT. $ 288,000.00 RESERVE 30,000.00 These Reserves include funds to cover any Environmental Fines, Research and Development, Training, and Contingencies. BUILDING UPKEEP 18,000.00 INITIAL STOCKING OF MATERIALS AND SUPPLIES 45,000.00 EMPLOYEE CONTRACT BILLING (UNC/LEAR SWGLER)... 318,000.00 ADMINISTRATIVE STAFF SALARIES AND WAGES 285,000.00 Page 6 1996 to 2001 Ultimate Aerospace Refinishing Company OPERATIONAL COSTS $ 60,000.00 Business Plan Robert L.Mixon UARCO These operational costs will include travel for marketing and sales personnel, advertising, office equipment purchases and lease costs, supplies, and general administrative costs. ENVIRONMENTAL AND SPECIAL PERMITS $ 16,000.00 (One time annual cost estimate) COOPERATIVE CONTRIBUTIONS $ . 9,000.00 WORKING CAPITAL $ 31,000.00 . TOTAL COSTS $1,100,000.00 LOAN RETIREMENT Fully amortized 5 year loan. FINANCIAL SUMMARY Projected Income Statement Summary (SM,SK) Estimates 1996 1997 1998 1999 2000 NET SALES $5.8M $6.6M $7.6M $8.7M $9.9M UARCO COSTS $3.9M $3M $3.1M $4.1M $5.5M GROSS PROFIT $1.9M $3.3M $4.5M $4.6M $4.4M* (EXPENSES) S.G.& A. $900K $1.5M $1.8M $1.7M $1.6M (The increased S.G. &A in 1998 is a result of expectation of closing of the airstrip) PAGE 7 1996 to 2001 BUSINESS PLAN Robert L. Mixon Jr. Ultimate Aerospace Refinishing Company UARCO Other Expense 0 0 0 0 0 Other Income 0 0 0 0 0 NET LNCOME $1M $1.8M $2.7M $2.9M $2.8 INCOME $750K $1.3M $2.03M $2.2M $2.1 M (AFTER TAX) As opposed to writing two scenario's, Best and Worst Case, I chose to use the, Most Likely Scenario. This is predicated on only having one single core workload client in the accounting timeframe. OBJECTIVES 1) Generate Net Sales to over 55M per year over the first three years without sacrificing profitability and sustain consistency for years four and five, and escalating Net sales to $8.6M in each of those years. 2) Become a major depainting and painting service company in the State of California. 3) Re- employ 110 displaced Federal Employees from NAS-Alameda, NADEP - Alameda, and Public Works Center (PWC) whose jobs were ,abolished due to 1993 Base Closure and Realignment decisions. STRATEGIES 1) Secure and sustain lucrative long term contracts from a diversified customer base in the fields of aviation, rail transit, seagoing cargo containers, road transportation vehicles, and large scale construction vehicles. 2) Provide the best scientific environmentally compliant depainting, and painting services to those products. 3) Secure a line of credit that will initially fund the start-up of this company. Page 8 1996 - 2001 Business Plan Robert L Mixon Jr Ultimate Aerospace Refinishing Company UARCO 4) Maximize the production capacity of each of the facilities. 5) Consistently display to our customers through our service in the field, their value to us as customers. 6) Produce the highest quality product in the shortest turn-a -round time to avoid the customer's loss of revenue. 7) Regulate workload so that it does not outstrip available capital. 8) Continue to expand our customer base not only to include the US but overseas as well. 9) Hire the best qualified, dedicated, and motivated displaced Federal workers available to perform the day -to -day operations required to produce a quality product, on schedule, and at or under cost PRODUCT AND SERVICE THE UNFILLED NEED UARCO is well aware of the host of environmental concerns of Californians, as we are part of that citizenry. We have an obligation to produce our product in such a manner as to minimize the impact it may have on the environment. UARCO will meet the needs of not only our customers, but the community as well. We intend to support local vendors to the degree possible, and help the local economy recover from the devastation of base closure. UARCO is well aware of the advantages of having environmentally compliant facilities in such a stringent environmentally conscious state, and we want to help propel the notion that industry can be good neighbors to the community in which they abide. The challenge for UARCO will be to sustain high quality workmanship and build quality into the product on a consistent basis, thereby building client trust in us, and continue to have a high customer demand for our services. Page 9 1996 to 2001 Business Plan Robert L.Mixon Jr. Ultimate Aerospace Refinishing Company UARCO PRICING AND VALUE The transportation industries rely upon their particular modes of transport to maintain their profitability, and must keep those modes of transport in service with a minimum amount of downtime for periodic maintenance. Turn-a -round time becomes of paramount importance, and UARCO because of the size of their facilities will reduce what they currently experience in most cases by 60 %, and at a relatively lower cost. Currently, the major competitors average 24 calendar days for an average size aircraft from induction to completion. UARCO can deliver three of that same size aircraft in eight days, or in 1/3 of the time now experienced. We can provide a 1000 thousand flight hour warranty on workmanship and material, or one year which ever comes first. We can beat the price of our competitors by $7.5K per aircraft. The capacity of UARCO's Facilities allows for the diversification of workload that will include large transit vehicles, large construction type vehicles, over - the -road cargo trailers, seabound cargo containers, military vehicles (tracked/non- tracked), rotary wing aircraft, and vying for contracts for refurbishment of transit rail vehicles. PRICING OBJECTIVES The goals of UARCO and its marketing arm provide the basis for the development of pricing objectives, which must be clearly established before pricing policies and procedures are implemented. The table below is provided to display the route taken to get to that point: COMPANY} - - -} MARKETING } ---- }PRICING }--- }PRICING1 OBJ.E:.CTIVES OBJECTIVE • OBJECTIVE POLICIES AND PROCEDURES - UARCO has as its primary objective the goal of becoming the dominant factor in our market. - Our Marketing Objective then is to achieve maximum sales /marketing penetration, specifically targeting the regions of The United States, West of The Mississippi River. This region places the highest premium of demand upon UARCO's services. Page 10 1996 to 2001 Business Plan Robert L. Mixon Jr. Ultimate Aerospace Refinishing Company UARCO - UARCO has as its Pricing Objective three major objectives, profitability, volume, and that which is what we consider ethical. The makeup of UARCO's Pricing Objective is not complex, but one that will require constant vigilance to establish at what significant point UARCO pricing increases to meet what our market niche will pay predicated upon the quality of our service, as well as past performance. Our Pricing Objective in theory is to maximize profits. We base this entire concept upon certain assumptions: - As providers of service to the transportation industry we assume our customers are rational. Rational behavior in this context is the realization that they desire to maximize gains and minimize losses as a result of slow turn-a -round time in the processing of their mode of income. In reciprocal fashion Profit Maximization is UARCO's basic objective. Those profits in turn are a function of revenue and expenses: PROFITS = REVENUES - EXPENSES UARCO's revenue will be determined by the cost of our services to the customer (selling price), and the volume of work inducted and processed through the plant. TOTAL REVENUES = PRICE X VOLUME OF WORKLOAD NOTE: UARCO's price to the customer should be increased up to the point where it causes a disproportionate decrease in the volume of work inducted and processed through our plant. Example: A 5% price increase that results in only a 3% reduction in our volume of works adds to UARCO's profitability. However, a 7% percent increase in our prices that creates an 8 percent decline in the volume of work is unprofitable. PRICING GOAL - Meeting competitors, and obtaining and maintaining a higher market share, and target a return of 14% to 25°./0 on investment. (after taxes) Page 11 1995 to 2001 Business Plan Robert L.Mixon Jr. Ultimate Aerospace Refinishing Company UARCO COLLATERAL PRICING GOALS A. Charge what the customer market will bear in the long term. B. Maintain largest Market share by establishing/controlling Prices through continuing increase in quality, and shorter turn-a -round time. MARKET RESEARCH AND ASSUMPTIONS MARKET OVERVIEW AND SIZE The continued growth of the transportation industries via air, rail, ship and over the road transportation has opened a wide range of opportunities for a company such as UARCO. Especially in the state of California. UARCO provides the entire Pacific West an environmentally compliant facility within California to meet long term as well as large scale stripping, blasting, The continued growth of the transportation industry via air, rail, ship, and over - the -road transport has opened up a wide range of opportunities for a company such as UARCO, especially in the State of California. UARCO provides and painting contracts. As the Department of Defense vigorously tries to divest itself of the cost of sustaining its many depot level maintenance facilities, the only avenue to accomplish that end is the need to contract out a large portion of that work which is currently done in- house. The increases of commuter airline flights, local rail transit extensions, and increasing Port of Oakland shipping and receiving activities create a need for U.ARCO's services. MARKET SEGMENTS The market for depainting, corrosion arrestment, and refinishing can be broken into seven segments: 1) US Government/Department of Defense Contracts 2) Commercial Airlines 3) Corporate Owned Air Conveyances (Fixed or Rotary) 4) Local Rail Rapid Transit 5) State Department of Transportation Contracts 6) Sea and Land Transit Cargo Containers 7) Large Scale Construction Vehicles Page 12 1996 to 2001 Business Plan Robert L.Mixon Jr. Ultimate Aerospace Refinishing Company UARCO UARCO has chosen to concentrate on the first five categories of potential customers. These segments have experienced over a 45% growth in the past five years, and enjoy the highest gross profit margins of this industry. The customers require a high level of service and support, and though a former Department of The Navy Activity, UARCO has established themselves as the best even under the DOD umbrella. CUSTOMER PROFILE The five major categories of our anticipated customer base are: 1) Department of Defense Contracts 2) Commercial Airlines 3) Public Transportation Conveyances 4) Corporate/Privately Owned Fixed/Rotary Wing Aircraft 5) Over- The - Road/Sea Cargo Containers/Construction Vehicles The customers in this group are driven by schedules, and reduced maintenance budgets, but an ever increasing workload due to high demand. This demand for example in the DOD arena is driven by the need to avoid maintenance backlogs, and providing necessary equipment to field activities in order to sustain operations of differing degrees of military readiness. All of the customers that will have a need for this service seek: High Product Quality. Durability, Performance to Schedule, Reasonable Cost, and Follow -up Service. The customer is highly intelligent as to the finished product, places extreme importance upon product preparation, and cosmetic appearance, especially in the case of commercial customers who utilize their vehicles as a form of advertisement. UARCO (under the DOD umbrella of NADEP - ALAMEDA) earned merit in the Aircraft Paint Branch as a proven provider of quality products, performing to schedule, and at a cost well below budget in material as well as labor costs. The results of our direct mail campaigns will indicate that as a factual claim. Page 13 1996 to 2001 Business Plan Robert L.Mixon Jr. Ultimate Aerospace Refinishing Company UARCO COMPETITION Competition in the Aerospace Refinishing Industry in California is minuscule due to the stringent Air Quality regulations revolving around uses of Toxic substances such as primers, paints, and solvents. The costly revamping of existing facilities to meet Environmental Protection Agency (EPA) emissions standards as well as Local Air Quality Management District rules and regulations has made the feasibility of operating with this geographical region not cost effective. Those competitors who have however managed to meet those mandates are small in size, and not capable of handling the size and volume of workload anticipated by UARCO. UARCO's ability to meet the Environmental Rules and Regulations, and the "State of The Art" depainting and painting technology utilized in the performance of tasks, and its geographical convenience to our targeted customer base makes it the leader and second to none. MARKET SHARE Estimate for the northern California area indicates that UARCO will have the "Lion's Share" in the depainting and refinishing industry as there is no competitor within the region with the capability of UARCO. Considering what is available in Southern California, our nearest competitor is AeroFlight Painting Co., but limited capacity, and not being able to handle large scale contracts in as wide as field as UARCO is entering offers up meager 12% of the proposed market to AeroFlight. (Primarily small corporate aircraft. and private owner single engine aircraft) GEOGRAPHIC MARKET FACTORS The market for UARCO's service and in its diversity throughout the state is nearly non - existent. Preliminary marketing studies have revealed that the customer bases in need of our services have not been fully tapped. Because of this, we take the position that a strong advertising campaign via mail, trade magazines, and newspapers will inform our future customers of our existence and the services available at our facilities. The Bay Area and The Port of Oakland's desire to become the Gateway to The Pacific Rim only open up further potentials especially on the foreign side for UARCO. The potential for future satellite operations for UARCO is already part of our long term planning. Page 14 1996 to 2001 Business Plan Robert L.Mixon Jr. Ultimate Aerospace Refinishing Company UARCO BARRIERS TO MARKET ENTRY The primary barrier for any company to compete with UARCO in California is the capacity to expend necessary capital to construct a facility the size of UARCO. The preliminary cost of environmental impact studies, environmental permits, and authority to construct would not be cost effective as demonstrated by United Airlines decision to build a Maintenance Depot in Indianapolis with facilities similar to UARCO to accommodate their large passenger aircraft. Currently United contracts out the depainting and painting of the smaller 727 and 737 commuter aircraft. UARCO stands to benefit largely from the commuter airlines. MARKETING STRATEGIES UARCO will concentrate its marketing activities on: 1) Department of Defense Stripping and Painting of military hardware. (Tracked and Non - Tracked Vehicles, Aircraft fixed or rotary wing, support vehicles and miscellaneous items) 2) State and Local Transit Authorities. (Transit Rail Vehicles, Busses, Large Construction Vehicles, Police Helicopters and Fixed Wing Aircraft, and large Cargo hauling vehicles of sufficient quantity.) 3) Commercial airlines for the short term with a need for meeting FAA criteria on air worthiness that requires total stripping, corrosion inspection, and subsequent corrosion removal and repainting. This will be considered short term workload dependent upon the operation of the airfield at NAS- Alameda. We are currently conducting a contingency study on the feasibility of barging aircraft from Oakland Airport to our facility if the need arose. If the study reveals that barging is a cost effective method that only increases the ability of UARCO in the long-term for this type workload. The basic marketing strategy will be to expand beyond local boundaries into other regions that have demonstrated through our mailings and ad campaign a need for our services. Customers will be reached through direct mail campaigns, site visits, space advertising, and by our reputation for quality and outstanding service. Publicity will also be generated through UARCO being viewed as a positive success story for communities suffering through base closures. Page 15 1996 to 2001 Business Plan Robert L.Mixon Jr. Ultimate Aerospace Refinishing Company UARCO The best publicity of all will be UARCO's contribution to the community by sponsoring charity events, and the prominence of UARCO personnel at community functions. UARCO understands the importance of Good Neighbor Relations, and the willingness to share with the community in which it exists. Our Sales and Marketing staff will spend at least 900 hours per year on the road making new contacts and maintaining excellent rapport with our current customer base. The Marketing team is extremely knowledgeable in our day to day plant operations, scheduling. capabilities, pricing, and good customer /supplier relations. Their site visits to our customers will be of paramount importance to the customer, and will have a reciprocal effect upon the integrity of UARCO. There will be an open invitation to our customers to visit our facilities, and see the UARCO process in work. This will help encourage customer confidence, and strengthen their reliance as well as faith in UARCO. OPERATIONAL PLANS SALES FORECAST The business is projected to reach over $9.9M in sales by 2001, maintaining a gross profit margin of 40 to 50 %. The target customers continued growth and the desire to divest itself of excess capacity and infrastructure will create further workload for UARCO. A detailed and comprehensive sales forecast will be published at the conclusion of our Marketing Survey, which will provide us more data upon which to base our assumptions. PRODUCT POSITIONS AND FORECASTS To be developed after the Marketing Survey is completed. i i : 4 •1 a 1111111lat num WW1& IS FINANCE DEPT. ROOM 310 2263 SANTA CLARA AVE. ALAMEDA. CA 94501 510 - 748 -4561 CITY OF ALAMEDA BUSINESS LICENSE APPLICATION APPL. NEW CHANGE NO . l2 3 2 7 >'x L. BUSINESS NAME LILT ; MATF AEROSPACE R1::PINIEH. . CO. ACCOUNT # LIC. # BUSINESS STREET ADDRESS NAS ALAMEDA (;'enaLive) CITY ALAMEDA ZIP 945Li BUS. TEL. # 2b3 -U45U (51u) TYPE OF OWNERSHIP SOLE PROPRIETORSHIP PARTNERSHIP CORPORATION ❑ DESCRIPTION OF BUSINESS ACTIVITY t -,ero pace and ,.1SC L`-i.'1 pir:y, Blas..ilit;r and Pa l f t 2. t.q . MAILING ADDRESS: 9U9 marina viiiiage par kway LJ'71=. X.111 .. i a.,, ? ".'%2 i Ca 9;1:3!.;_l FED. EMP.IDNO./SSNO. CONTRACTOR NO. PLEASE COMPLETE ALL INFORMATION. IT WILL ASSIST THE POLICE DEPARTMENT IN CONTACTING YOU IN THE EVENT OF EMERGENCY. SALES TAX NO. ANNUAL SALES TAX COLLECTION (EST.) ANNUAL GROSS RECEIPTS (EST.) $200 .K BUSINESS OWNER #1: NAME: Otis C. Wicks (Vice President) ADD:STREET 2742 Bartlett St CITY oa :land ZIP 94t u. TEL. NO. (510 ) 5 3 4 57°5 DRIVER'S LICENSE # ,`'t13:-347 i NO. OF EMPLOYEES IN ALAMEDA 110 NO.OFIJNITSRENTEDOUT NSA NO. OF CABS/MOTORBUS FOR HIRE Ni-A BUSINESS OWNER #2: I NAME: . l -•,'; .. ........ :. , .... - : . • ADD:STREET , v 2 ) r53:... CITY '' 1. cilt: ZIP - • -- -s. TEL. NO. J i �' 1 :— %' % :j j- " DRIVER'S LICENSE #1!:'3:".2 -' - ' OTHER (COMMERCIAL RENTAL - SQ. FT.) _._. ti -�� _ �'.:_ _: - - .. I DECLARE UNDER PENALTY OF PERJURY! THAT THE INFORMATION IN THIS APPLICA- TION IS TRUE AND COR - T. ' i X X /4:>; MANAGER ' OFFICE NAME: ADD:STREET - - • 0 (. = _ .. - • • • . SIGNATURE pQ ?E �� CITY , _ • ZIP " `•'' TEL. NO. (� DRIVER'S LICENSE # N534 i S EMERGENCY CONTACT/ALARM COMPANY ADD•STREET CITY ..L •::L J., ZIP i4Su: TEL. NO. ' 5 L') 1 2!•3 -37ab FOR OFFICE USE ONLY SEP 9 1994 TAX RATE CATEGORY, OF AL AMLDA STATE IND. CODE NO. BILL,LN.G FREQUENCY A ;ANNUAL Q = QUARTERLY BUSINESS TYIt AMOUNT PAID � S,� ) � AM C�) APPLICANT Alameda Reuse and Redevelopment Authority Inter- Office Memorandum May 31, 1995 TO: Honorable Members of the Alameda Reuse and Redevelopment Authority FROM: Kay Miller, Executive Director Alameda Reuse and Redevelopment Authority SUBJ: Report from the., Executive Director of the Alameda Reuse and Redevelopment Authority (ARRA) Recommending the Alameda Fleet Industrial Support Center (FISC) Annex Come Under the Jurisdiction and Control of the ARRA, and Transmission of a Request from the Alameda Base Reuse Advisory Group (BRAG) to Have the BRAG be the Advisory Group for FISC as it Has Been for the Alameda Naval Air Station Background: The Alameda Base Reuse Advisory Group (BRAG) sent the attached letter to the Chair of the Alameda Reuse and Redevelopment Authority (ARRA) requesting that the citizen oversight of the Alameda Fleet Industrial Support Center (FISC) Annex be referred to the BRAG. The BRAG suggested that, for the overall benefit of the City of Alameda, coordination between the Alameda Naval Air Station (NAS) and FISC is important when developing reuse alternatives and making grant requests so that proposals not become competitive with each other. To coordinate the overall reuse planning for NAS and FISC, it is recommended that FISC also be placed under the control and jurisdiction of the ARRA. Discussion/Analysis: FISC has been added to the BRAC 1995 list for possible closure. BRAC will make its final recommendations to Congress this July. ',Whether or not FISC is recommended for closure by BRAC, coordination of the reuse planning for both FISC and NAS would ensure proposals for each location not compete. If FISC does become part of the final BRAC 1995 closure, the Office of Economic Adjustment (OEA) has indicated that the ARRA could apply for OEA reuse planning funds for FISC. OEA staff also indicated that OEA reuse planning funding would not be available for FISC under a long teliii lease arrangement with the City of Alameda. Honorable Members of the Alameda Reuse and Redevelopment Authority Budget Consideration /Fiscal Analysis: May 31, 1995 Page 2 By having FISC under the ARRA's control, the ARRA assumes financial responsibility to provide additional staff and funding for consultant activity to conduct reuse planning for FISC. If the ARRA is unable to apply for OEA funding for FISC, other sources of funding would have to be identified. Even if the BRAG subcommittees remain the same for the public participation effort for FISC, additional staff work may be needed if the BRAG subcommittees schedule additional meetings for FISC or if the membership of the eleven BRAG subcommittees increases dramatically. If the ARRA does apply to OEA to fund- reuse planning for FISC, additional funding could be sought for the BRAG efforts on FISC. Recommendation: It is recommended that the ARRA accept the BRAG recommendation to have the BRAG function as the citizen's advisory group for the reuse planning for FISC, and that FISC come under the coordination and control of the ARRA. Respectfully submitted Kay Miller, Executive Director Alameda Reuse and Redevelopment Authority Attachment: BRAG Letter to Chair Appezzato Regarding FISC Alameda Reuse and Redevelopment Authority Naval Air Station Postal Directory, Bldg. 90 Alameda, CA 94501 -5012 510- 263 -2570 '' FAX 510 -521 -3764 ARRA Chairman Ralph Appezzato Office of the Mayor City of Alameda City Hall, Room 301 2263 Santa Clara Ave. Alameda, CA. 94501 'May 1, 1995 Dear Mr. Appezzato: For sometime the BRAG has been considering the role of the Fleet Industrial Support Center Annex (FISC) and its' relationship to the redevelopment of the Naval Air Station (NAS) lands. It is difficult to propose re -use alternatives unless consideration is given to the potential development of the Center and its' impact on the amount of commercial/industrial development for the base, the location of such uses and the schedule of development. In the plans for the reuse alternatives we are also very concerned that development ofNAS and the Center not become competitive with each other and to ensure that coordination of the schedule for development as well as reuse proposals and grant requests are coordinated for the overall benefit of the City. • As a result of these considerations, the BRAG would like to recommend that the FISC be referred to the BRAG for oversight and coordination, The BRAG has developed considerable expertise in this area after working on the NAS for a year and a half. We also believe that the BRAG has gained credibility in representing the community and could ably carry out this additional task. Sincerely, Lee Perez., Chair Base Reuse Advisory Group (BRAG) LP :JJ Alameda Reuse and Redevelopment Authority Inter- Office Memorandum May 31, 1995 TO: Honorable Members of the Alameda Reuse and Redevelopment Authority FROM: Kay Miller, Executive Director �C Alameda Reuse and Redevelopment Authority SUBJ: Report, from the Executive Director Regarding the Alameda Base Reuse Advisory Group (BRAG) Request to Make the BRAG Advisory to the Alameda Reuse and Redevelopment Authority Background: In July 1993, the Alameda City Council created the Alameda Base Reuse Advisory Group (BRAG) to provide a forum for community input to the base reuse planning process. The BRAG has been advisory to the Alameda City Council and reported to the Alameda City Council. In an effort to streamline the reporting process, the BRAG has requested that it be discontinued as a City entity, and that the BRAG be transferred as an advisory body to the Alameda Reuse and Redevelopment Authority (ARRA). This proposal has been endorsed by the Alameda City Council. Discussion /Analysis: The BRAG consists of a chairperson and eleven members. Each of the BRAG members Chairs a subcommittee. The eleven BRAG subcommittees include: Economic Development, Land Use, Reuse, Infrastructure, Recreation, Education, Employment and Retraining, Human Impact, Housing, Community Involvement, and Environment. The subcommittees meet weekly or bi- weekly, and the BRAG meets twice a month. While the BRAG members are Alameda residents, the BRAG subcommittee membership is open to residents from throughout the region. Since its creation, the BRAG has reported to the City Council, and only after the City Council has taken a position on the BRAG's recommendation has the item been presented to the ARRA for its consideration. The BRAG has requested that it be advisory to the ARRA rather than first having to report to the Alameda City Council and then again report to the ARRA. Since the entire Alameda City Council sits on the ARRA, this proposal would streamline the reporting process and help expedite reuse planning. Honorable Members of the Alameda Reuse and Redevelopment Authority Budget Consideration/Fiscal Analysis: May 31, 1995 Page 2 The proposed reporting change will have no substantial impact on the ARRA's current budget. There may actually be some minor administrative savings as the ARRA staff will not have to prepare separate staff reports for the Alameda City Council and then the ARRA. However, for the next fiscal year, staff from the Office of Economic Adjustment (OEA) has stated that OEA does not fund community advisory group activities beyond completion of the Community Reuse Plan. (For the ARRA that is December of 1995.) Therefore, if the ARRA wants to continue the BRAG activities beyond completion of the Community Reuse Plan in December 1995, another source of funding will need to be identified. Recommendation: It is recommended that the Alameda Reuse and Redevelopment Authority (ARRA), by motion, accept the Alameda Base Reuse Advisory Group (BRAG) as an advisory body for the ARRA. Respectfully submitted Kay Miller, Executive Director Alameda Reuse and Redevelopment Authority Attachment: BRAG Report to Alameda City Council City of Alameda inter-department Memorandum April 11, 1995 TO: Honorable Mayor and Members of the City Council Chairperson Lee Perez Base Reuse Advisory Group FROM: RE: RECEIVED APR 17 1995 iiASE CONVERSION OFFICE CITY OF ALAMEDA Transfer of Base Reuse Advisory Group to ARRA Background: At its July 14, 1993 meeting, the City Council approved creation of the Base Reuse Advisory Group ("BRAG") to advise the City Council on base conversion efforts. The BRAG was originally structured with a chairperson and ten members. Each of the members was to chair one of the BRAG subcommittees. Because administrative difficulties have arisen out of this complex structure, it has been suggested that the BRAG and its subcommittees be discontinued as City of Alameda bodies and that the BRAG be transferred to the Alameda Reuse and Redevelopment Authority ("ARRA") as an advisory body to the ARRA. Discussion/Analysis: The Base Reuse Advisory Group currently consists of a chairperson and eleven members. Each of the BRAG members chairs a subcommittee. All of these bodies meet to advise the City Council on base conversion efforts. In an effort to streamline the reporting process, BRAG representatives have suggested that the BRAG be discontinued as a City body, and that it be transferred to the Alameda Reuse and Redevelopment Authority as an advisory body. The advantages to such a move are two-fold. The ARRA is now the agency with the most direct authority over base conversion. The recommendations of the BRAG would, therefore, be more appropriately directed if they were to go to ARRA rather than initially to the City Council. Budget Considerations/Fiscal Impact: Administrative costs related to staffing the BRAG may decrease by transferring it to the ARRA. Reports #5-B 4-18-95 Honorable Mayor and Members of the City Council Recommendation: April 11, 1995 Page 2 It is recommended that the City Council, by motion, discontinue the Base Reuse Advisory Group and its subcommittees as City of Alameda bodies, and transfer the Base Reuse Advisory Group as an advisory group to the Alameda Reuse and Redevelopment Authority, subject to the Alameda Reuse and Redevelopment Authority subsequently accepts the Base Reuse Advisory Group. Forwarded: Respectfully submitted, Lee Perez, Chairpe son! Base Reuse Advisory Group Alameda Reuse and Redevelopment Authority Inner - Office Memorandum May 31, 1995 TO: Honorable Members of the Alameda Reuse and Redevelopment Authority FROM: Kay Miller, Executive Director Alameda Reuse and Redevelopment Authority SUBJ: Report from the Executive Director Recommending Endorsement of the Environmental Aqua Services, Inc. Proposal For an Interim Use to Develop and Operate a Business at the Naval Air Station (NAS) Alameda for Environmental Clean -up for the Remediation of Soil and Groundwater Contamination and Authorization for the Executive Director of the Alameda Reuse and Redevelopment Authority (ARRA) to Negotiate and Execute a Lease with Lease Rates, Terms and Conditions with the U.S. Navy and Environmental Aqua Services, Inc. for the Use of Buildings and Facilities at NAS Alameda Background: Environmental Aqua Services (EAS) submitted a proposal to the Alameda Reuse and Redevelopment Authority (ARRA) in 1994. Environmental Aqua Services is interested in using Buildings 20 and 21 for its proposed environmental cleanup business, specifically in the remediation of soil and groundwater contamination. This proposal was reviewed and recommended for approval by the BRAG at their regular meeting of May 24, 1995. DiscussionlAnalvsis: EAS is presently negotiating with the University of California Berkeley/Lawrence Livermore National Laboratory (UCB/LLNL) patent holders for the exclusive commercial license for the proposed technology. The environmental remediation technology is proposed to be packaged into a series of self - contained, highly mobile vans (40' trailer vans), and sold as a turn -key system with full operational, product and marketing support. This product will be provided to affiliates who in turn will use the system to provide remediation services on a cost- per - cubic- yard - cleaned basis. Environmental Aqua Services estimates the creation of over 200 jobs in the first two years in the areas of scientific, engineering and production areas as well as other skilled and unskilled labor. Many of these jobs could be drawn from the labor pool that currently exists of former and separated NAS Alameda employees. Honorable Members of the Alameda Reuse and Redevelopment Authority May 31, 1995 Page 2 EAS anticipates finalizing the contracts in the next two to three months and occupying spaces in 1996. EAS will•be requesting a five -year lease. Options would depend on the volume of future business activity and contracts. EAS is interested in Hangers 20 and 21 for its proposed assembly operation and offices. Initial financing for the new business are from three sources, the Government, Equity Shares, and Industrial Development Bonds. CEQA Compliance: Endorsement of Environmental Aqua Services proposal in concept is not considered a project under the CEQA guidelines (as adopted by the ARRA, August 1994). As part of the ongoing negotiation and lease process, the ARRA will process a Use Permit and CEQA review for Environmental Aqua Services, Inc. Findings of this CEQA review will be presented to the ARRA and the City of Alameda for further consideration and action. Fiscal Impact: Negotiations with EAS on the use of facilities at NAS Alameda will have no impact on the existing ARRA funding. If implemented, the interim reuse of Buildings 20 or 21 could have significant positive or negative impacts on funding for the Alameda Reuse and Redevelopment Authority and the City of Alameda. The financial analysis in the Interim Reuse Strategy indicates that under the best possible scenario, the ARRA will be operating with a deficit in the first five year period. Depending on the lease rates and the terms and conditions of the lease, the interim use of Hangers 20 and 21 could provide a portion of the necessary funds to maintain a positive cash flow to the ARRA and the City. While individually leases may have a small financial impact, cumulatively the impacts could be substantial. It is imperative that the ARRA get the best deal possible with this and other interim reusers. Each new lease should at least "pays its own way" in order not to put a significant financial burden on the ARRA, the Navy or the City of Alameda. Honorable Members of the Alameda Reuse and Redevelopment Authority Recommendation: May 31, 1995 Page 3 It is recommended that the Alameda Reuse and Redevelopment Authority endorse the proposed use by Environmental Aqua Services, Inc. support an interim use to develop and operate a business for environmental clean -up and authorize the Executive Director of the Alameda Reuse and Redevelopment Authority to negotiate and execute a lease with the U.S., Navy and Environmental Aqua Services, Inc. for the use of buildings and facilities at NAS Alameda. Respectfully submitted, e(7. Kay Miller, Executive Director Alameda Reuse and Redevelopment Authority DPT /dpt Attachments: Environmental Aqua Services, Inc. Proposal Environmental Aqua Services, Inc. Business Plan Confidential March 18, 1995 Environmental Aqua Services • P.O. Box FE • Belmont, CA • 94002 • 415-802-7000 Tel • 415- 802 -7004 Fax Table of Contents Table of Contents 2 Executive Summary 4 Business Overview 6 Company 6 Industry 6 Scope 6 Marketplace 6 In Situ Technologies 7 Dynamic Stripping 7 Product Description 8 Proprietary Position 10 Market Potential 11 Market Analysis 12 Market Size and Trends 12 Competitive Technologies 12 Competition 12 Customers 13 Sales & Marketing 14 Marketing Strategy 14 Sales Tactics 15 Sales Goals 15 Exporting 16 Pricing 16 Advertising, Public Relations & Lobbying 17 Advertising 17 Public Relations and Lobbying 17 Customer Service and Support 17 Training 17 On -going Support 18 Warranty Policies 18 Design and Development Plans 19 Development Status and Tasks 19 Difficulties and Risks 19 Engineering/ Development Costs 19 EAS Operations Plan 20 Geographic Location 20 Environmental Aqua Services Page 2 March 18,1995 Business Plan Facilities and Improvements 20 Production Plan 21 Production Costs 22 Labor Force & Employment 22 Environmental Aqua Services 23 Company Organization Structure 23 Key Management Personnel & Full Time Consultants 24 Board of Directors & Advisory Board 26 Board of Directors 26 Scientific Advisory Board 26 Supporting Professional Services 26 Overall Schedule 27 Pre- Production Timetable & Milestones 27 Detailed Timetable 28 Critical Risks and Problems 29 The Financial Plan 30 Profit and Loss Forecast 30 Funding 31 Financing 32 Desired Financing 32 EPA/DOE/DOD Endorsements 32 Appendix A 33 Soil and Groundwater Remediation Methods 34 Appendix B 35 1. Dynamic Underground Stripping Process 36 2. Process Schematics 38 Appendix C 39 Design Drawing of MHRU Control Van A 39 Appendix D 40 Computer Hardware and Software Design Details 40 Appendix E 42 Schematic of EAS Production Process 42 Appendix F 43 Vapor Extraction as a Remedial Technology 43 Environmental Aqua Services Page 3 March 18,1995 Business Plan Executive Summary Environmental Aqua Services (EAS) has identified a significant market opportunity in the rapidly growing environmental clean-up industry, specifically in the remediation of soil and groundwater contaminated by hydrocarbons, solvents and heavy metals. The size of the domestic portion of this market is estimated to be in excess of $29.5 billion and includes over 300,000 sites with contaminated soil and groundwater. The international market is conservatively thought to be 3 to 4 times larger. No existing commercial methods are currently available to effectively clean contaminated soil and groundwater on -site. After years of attempts where clean-ups often last dozens or more years at major sites, the result has been still land which is not commercially viable, groundwater migration problems that pose health hazards and sky - rocketing clean-up costs which have become litigation nightmares for insurance companies, banks, oil companies and municipalities. Effective new patented technology, however, does exist and has been successfully demonstrated by the developers at the University of California at Berkeley and Lawrence Livermore National Laboratories. The process utilizes steam injection, electric heating and vacuum extraction to strip contaminates from the soil and groundwater. Overall, the process has proven to be over 50 times more effective than the most widely used techniques now in use. It is also the only technology that can address complex remediation problems where contaminates are located below groundwater or under structures. With a 50 to 1 process improvement, the technology has the potential to radically change the economics of soil and groundwater remediation. EAS is presently negotiating with the UCBILLNL patent holders for the exclusive commercial license for the technology. EAS proposes to enhance the new technology with sophisticated electronic monitoring equipment that can remotely oversee and control the process. In addition, on -site contaminant treatment components will also be added along with data acquisition software for developing a remediation database. This total package will be built into a series of self - contained, highly mobile 40' trailer vans and be sold as a turn-key remediation system with full operational, product and marketing support. EAS will market the product through affiliates who in turn will use the system to provide remediation services on a cost - per - cubic - yard - cleaned basis to hazardous site operators, insurance companies, banks or other responsible entities. In addition to the initial system purchase price of $2.2 million, EAS will collect royalties targeted at $4.50 per cubic yard of soil cleaned as well as a mandatory annual maintenance fee amounting to approximately 11% of the total purchase price. In addition to royalties and maintenance fees, leased systems will also provide a continuing revenue stream and, by the seventh year of operation, are planned to be the companies main source of revenue. Environmental Aqua Services Page 4 March 18,1995 Business Plan The business is anticipated to be profitable by Year 2 of operation and generate $65 million in revenues by Year 5. The following highlights the projected five year operating performance of the company. Units Produced Total Revenues Gross Margin Operating Expenses Operating Income Interest Expense Pre Tax Profit Profit After Taxes Year 1 I $2,430,000 345.000 1,824,000 (1.479.000) 6,250 (1.485.250) ($1,485,250) Year 2 Year 3 Year 4 $ 45 65 $15,650,000 $63,630,000 $127,920,000 6.550.000 25.452.000 51.168.000 3,751,500 8,457,600 15,104,400 2.798.500 250,000 2.548.500 $1,682,010 16.994.400 1,272,600 15,721.800 $10,376,388 36.063,600 2,558,400 33.505.200 $22,11 3,432 Year 5 20 $169,295,000 67.718.000 21,050,650 46.667.350 3,385,900 43.281.450 $28,565,757 A $20 million investment program will be required to fund EAS's start -up and continuing operation through year 2 and the end of pilot production. This funding will be provided by a combination of $12 million in private funds, ($4 million in equity and $8 million in secured term debt) matched by $8 million in government funds from various state and local economic development agencies. With this level of funding, the company expects to reach profitability by the end of year two. At that time, the company should be in position to secure a second round of revolving financing for inventory, working capital and prior debt reduction. EAS has a strong, experienced management team in place who has worked over the past 2 years to develop a solid business concept and sound financial and marketing plan. The team is confident in being able to carry out the program effectively and profitably. Environmental Aqua Services Page 5 March 18,1995 Business Plan Business Overview Company Environmental Aqua Services, Inc. (EAS) is a Delaware corporation established in 1993 by a group of individuals interested in participating in the rapidly growing environmental clean-up industry. The company has identified a significant market opportunity in cleaning up groundwater and soils contaminated by hydrocarbons and other chemical wastes. Currently no existing commercial methods are available to effectively clean contaminated soil and groundwater on -site. New technology however, does exist for on -site soil and groundwater remediation. It has been developed, tested and successfully demonstrated by the University of California at Berkeley in conjunction with Lawrence Livermore National Laboratories. Results from this technology indicate that clean-ups can be accomplished in significantly less time than on -site treatment processes presently in use and at substantially lower expense. EAS is negotiating for the exclusive commercial license for this technology and will package it together with sophisticated electronic monitoring and treatment equipment as a turn -key system. This system will be sub - licensed to affiliates through direct sales or leasing agreements and will in turn, be used to provide a service to remediation firms specializing in large spill clean-ups and others. By packaging and commercializing this new process, EAS will be able to offer the first standardized commercial service which can in fact remediate contaminated underground sites and at the same time provide a needed service for the national and global environment. Industry Scope EAS will participate in the domestic and international soil and groundwater remediation market. Groundwater and soil contaminated with volatile hydrocarbons and other chemical wastes are major world -wide environmental problems. Domestically, problem areas range in scope from large Superfund sites to smaller local gas station sized hazardous waste areas. The EPA estimates the domestic remediation market alone to he in excess of $29 billion in 1995. The world wide market is estimated at 3 times this amount. Marketplace Underground spills have proven difficult to clean-up, no matter what their size and the remediation industry is still in its infancy with regard to major on -site clean-up and contaminate destruction. (The editor of Soil Magazine characterized the current state of the industry as emerging from the toddler stage to kindergarten.) Environmental Aqua Services Page 6 March 18,1995 Business Plan Presently, less severe spills are being successfully removed by excavation and off -site treatment or disposal of the contaminant, although this method is now becoming more strictly regulated and increasingly expensive. When a contaminate plume migrates deeper than 20 feet or moves under permanent structures, however, serious problems exist in effectively remediating the sites. In Situ Technologies There are a variety of techniques currently in use for soil and water remediation in these complex situations. They include on -site pumping and treating of groundwater, typically over many years, air sparging, soil washing, vapor removal both with and without steam, vapor venting and immobilizing through solidification or vitrification. To date, most of the remediation methods in use are implemented as site - specific trial- and -error efforts that use custom componentry and provide little or no monitoring to document the effectiveness of the work. In addition, none of the methods have proven effective in fully remediating the broad range of sites and conditions that are evidenced in the field nor have they effectively striped hydrocarbons and other hazardous wastes from permeable layers of sand and gravel and impermeable clays. See Appendix A for comparison of standard remediation methods. To help advance the science, the DOE and EPA have sponsored new developmental efforts for on -site clean-up. Among these are techniques that utilize microbiology, which by EPA estimates may apply to only 30% of soil remediation problems. The microorganism methods require very specific soil conditions, have a toxic by- product of methane gas and have limited effectiveness in water. Another method that has been tested includes encapsulating contaminated sludge with a cement slurry. Dynamic Stripping The new dynamic underground stripping technologies developed by UCB/LLNL have also been sponsored by the EPA and DOE and have received their endorsement. Unlike competitive methods, the results of the dynamic underground stripping process can be verified and quantified by the amounts of contaminate actually removed. The process has proven to be 50 times as effective as the conventional "pump and treat" methods being used at 300 designated Superfund sites and over 10 times as effective as the newer "pump and treat with vacuum extraction" process. Comparisons with microbiology, encapsulation and other new techniques also will show superior performance. In essence, the new EAS product will bring an elevated level of effectiveness and standardization to the remediation process which has proven elusive since the initial Superfund clean-up program was initiated in the late 60's and in turn, will accelerate the industries success and growth in this area. Because site remediation today is still such an imprecise science, and clean up can often last dozens of year or more at a major site, the EAS product, with a 50 to 1 process improvement, will radically change the economics of soil and groundwater remediation. Environmental Aqua Services Page 7 March 18,1995 Business Plan Product Description The product produced by EAS will enhance UCB/LLNL's patented dynamic underground stripping technologies with sophisticated electronic measuring, telemetry and contaminant treatment systems to produce a design -based solution that provides a high level of standardization for on -site remediation. UCB/LLNL's patented technologies utilize steam injection, electric heating and vacuum extraction to effectively strip hydrocarbons from contaminated soil and groundwater. Steam is pumped into strategically placed injection wells drilled around a contaminated area. The heat causes the contaminates to vaporize and the steam stream moves them toward a series of vacuum extraction wells where they are captured and reclaimed or disposed of properly. The operation is closely monitored utilizing electrical resistance tomography which captures and transmits a computer image of the steam /contaminant movement and allows the operator to control the process. Appendix B has a detailed description of the dynamic underground stripping process. Water table Steam Infection III Vacuum extraction Tomography monitors steam movement /771\\ To ft Tomography Images cleaned areas To 165 tt Weil -to -well stripping: 1 to 3 months 60to100ft UCB /LLNL Process. Steam drives contaminated groundwater toward extraction wells and then heats the soil to distill organics. Electrical heating dries and distills impermeable clays. Tomography monitors the process. The combined UCB/LLNL & EAS technologies will then be assembled as a complete system in a series of highly transportable custom vans. These self contained Mobile Hydrocarbon Recovery Units (MHRUs) will be electronically connected to a central office Environmental Aqua Services Page 8 Business Plan March 18,1995 with a geotech support and tracking facility. The EAS central office facility will provide an extensive level of technical support as well as back -up access to the technology developers who successfully developed and prototyped the process. The relatively small size and mobility of the MHRUs make them accessible to almost any potential job site. The MHRUs, will consist of five custom -made 40' trailer vans which house all the equipment necessary to effectively clean a site and be monitored and supported remotely. The Control Van A, divided into three compartments, contains a: • Control Room with all of the communications, laboratory, tomography, telemetry, monitoring and transmission equipment • Mechanical/Storage Room with mechanical equipment and storage • Common Area with bunk, galley, head and other accommodation necessities. See Appendix C for diagram of the Control Van. The four Recovery Vans house all of the recovery equipment required to run the technology including the external lines, hoses, cables, leads, etc. for down hole use in 10 injection wells. • Van B - Liquid Recovery and UV Treatment Equipment • Van C - Vapor Recovery Equipment • Van D - Steam Generator • Van E - Electrical Heating Equipment The Control Van units are designed to control, electronically monitor and transmit detailed technical information on every aspect of the job in progress. Raw data from field sensor inputs are processed through dual fault - tolerant acquisition subsystems and brought back to the appropriate consoles using LLNL's LabVIEW virtual screens. A MIRAN multi - component, multi -point vapor monitoring unit is being used to identify vapor type and vapor level at each recovery well. Tomography and software such as Intergraph's MGE Voxel Analyst, that models the structure and composition of the geology, will he use to project a visual 3 -D modeling of the site. All of this information is condensed and sent to a central location for support in controlling the stripping process. It is also used as the documented record of the number of yards cleaned. Environmental Aqua Services Page 9 March 18,1995 Business Plan 4 SITE •MONITORING CONSOLES 0 Communications da Soil Analysis AUDIO ALARMS & FLASHING WARNING INDICATOR BEACONS Weather Station Soil as Piping Temperature Sensors Pressure L. Liquid /Gas Flow Sensors Tomography Z FAX AFFILIATES OFFICE Pager Telephone Lines To Central Processing Center r EtherWave Network System Centralized Galley Monitor Station J ✓ .s rwr Centralized Redundant Acquisition as Signal Conditioning Field Sensor Inputs • • Site Monitoring Consoles. Data is accumulated from field sensor inputs and is transmuted to on -site monitor consoles in Control Van A and EAS Central Processing Center. The information will then be accumulated and used to build a comprehensive database documenting the effectiveness of the cleanup process under a wide variety of conditions. The database will allow the industry to improve the scientific understanding of the remediation process and provide useable data about the overall scope of the problem which is presently not accessible in any usable format. In addition, EAS will he able to use the information to develop accurate cost estimates for future jobs. See Appendix D for a description of the electronic hardware and software equipment. Proprietary Position The UCB/LLNL stripping technology is the only demonstrably effective soil and groundwater decontamination process in use today -- and it is patented. Environmental Aqua Services Page 10 March 18,1995 Business Plan EAS is negotiating for the exclusive world -wide licensing rights to these new patented technologies and will sub - license them to affiliates around the world. While other potential competitors may be working on similar technologies, it will take a significant amount of time and resources to workaround the UCB/LLNL patents. We estimate that EAS has a 3 to 5 year lead for the exclusive use of this technology, by which time the company will have established a strong position in the remediation industry. Market Potential The potential market for an effective remediation system is very large. Presently, more than 300,000 sites in the United States alone have been identified with contaminated groundwater and soil. Internationally, that number will conservatively double or triple. In addition, even sites that are currently being cleaned will be left with substantial residual contamination since the technologies and processes being used today are only minimally effective. As a complete design -based system, the EAS product will bring a high level of standardization to on -site remediation This standardization will help define and accelerate the industry's overall success in hydrocarbon remediation, which has proven elusive ever since the Superfund clean-up program was first defined in the late 70's. In addition, its remediation effectiveness, the ease of use, the portability to any location, and ability to be supported remotely will all help generate wide demand both domestically and internationally once the product is introduced. EAS anticipates that the new system will replace existing on -site remediation methods now in use and will become the decontamination process of choice for a minimum of the next five to ten years. And with upgrades and improvements as the technology matures over time, the total market life for the process should be able to be extended for an even longer period. Moreover, the database of remediation information is an ancillary product that will have wide marketability to governmental agencies and others involved in the industry. Environmental Aqua Services Page 11 March 18,1995 Business Plan Market Analysis Market Size and Trends The EAS product is part of an overall $120 billion world market and a $29.5 billion U.S. market for soil and water remediation. The EPA estimates that there are over 300,000 sites nationally which have contaminated groundwater and soil and 4 times that number internationally where the product can be utilized. Included in these numbers are approximately 1,200 Superfund Sites designated by the U.S. government and another 11,000 hazardous hot spots identified at 1,877 military installations. Although there are high -level estimates available about the market size in general, and masses of information scattered through various governmental agencies, little hard data has been aggregated into meaningful information to show the type and severity of contamination, specific geotech and other conditions at site locations or the type of remediation treatments being recommended or are currently in use. Researchers, industry participants and even the agencies themselves bemoan the lack of organized information available for use in planning and control. As additional contaminated sites continue to be uncovered and identified each year, the need for an industry wide remediation database becomes more and more important. Competitive Technologies The processes being used by almost all of the companies actively managing on -site remediation activities today essentially consist of pumping contaminated water out of the ground, shipping it to a remote site to be cleaned and then returning it to the location to be re- circulated. Contaminants located below the level of the groundwater are not being removed nor are any of those in the soil, except in the limited cases where microbiology can be used. In essence, none of the competitors are currently able to do an effective job of cleaning up spill sites at this point in time. Appendix A contains a detailed list of the various technologies presently in use today, a short description of the process and a summary of their advantages and disadvantages. Competition Because the technology that EAS will be using in the MHRUs will radically change the underlying economics of soil remediation, and that technology can only be used by obtaining a sub - license from EAS, there will be no true competitors once the company's product is launched. All of EAS's "competition" -- companies currently doing large, on -site hydrocarbon remediation projects -- will be potential customers. If they are involved in large, complex clean-ups and the site fits the profile of the EAS system's capabilities, "competitors" will Environmental Aqua Services Page 12 March 18,1995 Business Plan find it more cost effective and less time consuming to use the EAS system. It will pay them to become an EAS affiliate or to use an EAS affiliate to provide subcontracted services, rather than custom designing a solution themselves which attempts to work around the LLNL/UCB patents. Customers There are approximately 100 major remedial service companies that provide and manage the actual clean-up of contaminated soil and groundwater at specific large spill sites. They range in size from substantial international corporations to local companies with state -wide experience. Through an "affiliate" marketing structure, EAS will sell or lease the MHRU system to those remediation firms which specialize in the large spill segment of the clean -up industry. In addition, EAS will sell or lease the system within the affiliate structure to Fortune 500 companies, government agencies and others that self -manage their own remediation programs. Potential affiliate companies range from large existing remediation businesses that want access to the new technology, to individual scientifically oriented entrepreneurs who are interested in starting owner - operated environmental clean-up businesses; other prospects include tank removal and soil testing companies wishing to expand into the remediation area, and institutional participants such as insurance companies looking for a less expensive ways to remediate sites they insure. In addition, oil refineries, transporters, and storage facilities (who may also be ultimate end users), will be targeted as potential affiliates. To date, almost a dozen prospective customers have indicated serious interest in the EAS product. Several litigation firms representing insurance companies and oil companies have indicated that they would be interested in promoting the system to help alleviate remediation exposure for their clients. Two state transportation agencies expressed serious interest in obtaining the system to clean-up problems under their jurisdiction. In addition, several large oil companies are closely watching EAS's development as a long term solution to one of their chronic problems. Environmental Aqua Services Page 13 March 18,1995 Business Plan Sales & Marketing Marketing Strategy The overall marketing strategy for EAS is to enlist a core group of affiliate companies who will purchase exclusive geographical licenses to use the MHRU systems, which they in turn will use to provide highly standardized, effective remediation services to sites in their territory. A three- phased marketing approach will be necessary to develop the business. The first phase will acquire affiliates who will purchase the MHRUs. The second phase will support those affiliates in locating appropriate sites and assisting them in procuring contracts. A third phase will provide lobbying and public relations support with the appropriate regulatory agencies. Prospective affiliates initially will be identified through referrals from the regional EPA offices. Additionally, trade shows and print advertisements in professional journals and business publications will also be used to find prospects. Once identified, a turn key package will be offered that provides affiliates with all of the technology and equipment they need to operate the system, a pre - approved financing package for either leasing or purchasing the equipment, an initial in -depth training program, start-up support, help locating and securing appropriate clean-up sites, sales assistance as needed, full on -going geotech and operations support for each job, as well as a life -time maintenance contract for the MHRU. A second marketing effort will be centered on locating and acquiring job sites for the affiliate companies. The location and other detailed information about contaminated sites is readily available through the various state environmental protection agencies. Each state has a listing of "red flagged" properties, the associated owners, insurance companies, remediation companies and other responsible entities. In addition, the National Research Council, large mortgage banks and insurance companies all have their own databases of "flagged" properties which are used to avoid lending and insuring in and around those areas. The initial target markets for the affiliates in terms of site work will be the remaining large - site remediation companies who have chosen not to become EAS affiliates, insurance companies, oil companies or owners of sites currently in the process of being cleaned. Additionally, Superfund sites, military sites and sites flagged for cleanup by local city or state governments will be targeted. The public relations and direct governmental lobbying efforts will focus heavily on educating the various governmental agencies involved about the EAS MHRU's and the dynamic stripping technologies, with the goal of having the process certified and then "spec'ed" as a preferred remediation methodology by those agencies. In addition, leads and contacts will be established for the affiliate team. Environmental Aqua Services Page 14 March 18,1995 Business Plan Sales Tactics The MHRUs will be sold to affiliate companies as a complete system which includes vans, monitoring equipment, hardware, software and on -going technical support services. Affiliate companies will purchase the MHRUs for an initial contract price for the technology licensing fees and the exclusive use of the hardware, software and other equipment in a specific geographic territory made up of counties or individual states. They in turn, will use the system to sell fully documentable and fully supported remediation services on a cost -per- cubic- yard - cleaned basis to hazardous waste site owners/operators. EAS will, in addition, charge affiliates a royalty for each cubic yard of soil cleaned. To facilitate early acceptance of the new technology, EAS will offer a leasing program to affiliates. This will allow relatively easy access to the technology and over time will provide a continuing revenue stream that is anticipated to surpass direct system sales. EAS will utilize contacts at the U.S. EPA to develop lists of owners, responsible entities, insurance companies, oil companies, etc. for contaminated sites in specific territories where affiliates hold licenses. If contracts are already let for particular sites the prime contractors name will be obtained with the intent of approaching them as a sub - contractor. The affiliates will use the service's superior performance and documentable results to convince prospective customers of the time and cost advantages of using the new MHRU technology. For the most part, competitive technologies are "not cleaning sites, just pumping water and venting vapors ". The MHRU system can provide documented, before- and -after soil and water measurements to show the actual amount of cleaning accomplished. Sales Goals During the first 5 years, EAS estimates that 125 affiliates can be enlisted worldwide and licensed to use the EAS system. A proportion of these affiliates, in turn, are anticipated to manage multiple remediation sites simultaneously.. About 60 to 65 of these affiliates are conservatively estimated to buy or lease 2 complete systems during that period - yielding a sales level of approximately 190 complete systems. Systems Sold Systems Leased Total Sales Goals Year 1 Year 2 Year 3 Year 4 Year 5 Total 1 5 15 28 31 80 - 3 30 37 39 109 1 8 45 65 70 189 Environmental Aqua Services Page 15 Business Plan March 18,1995 Exporting The export market is estimated by the EPA to exceed the domestic market by 3 to 4 times. EAS plans to enter the export market early in the second year of production and has projected a minimum of 30% of the sold systems to be exported. Over time, it is estimated that this figure could approach 50 %. Pricing The purchase price for the MHRUs will be made up of an initial contract price plus royalties for each cubic yard cleaned. The initial contract price for the 4 basic MHRU vans which will be able to remediate most target sites is targeted at $2,200,000 with royalties projected at $4.50 for each cubic yard cleaned. A fifth 20' electrical soil heating van is available for special soil conditions and will be offered at a cost of $250,000. An annual maintenance fee will also be assessed at approximately $240,000 per system per year. Well casings needed for the system will be priced on a per job basis depending on the need. The initial contract price includes: Financing: pre - approval of the pro forma affiliate business plan by one or more financial institutions and the equipment that can be used as collateral. • Leased systems will cost $30,000 per month plus royalties and will include service and support. Hardware Equipment/Software: MHRUs containing all of the equipment and technology necessary to move onto, set up and remediate a site Licensing: one time licensing fee to use patented technology /methodology Initial Support: formal training program and initial start-up consulting Warranty: complete one -year warranty for MHRUs The royalties cover: Ongoing Operational Support: help locating and acquiring contracts at existing clean- up sites, review geotech and aid in site selection, ongoing technical advice and monitoring of clean-up process Payments to UCB /l.LNL: licensing royalty payments to UCB/LLNL for licensing their technology Environmental Aqua Services Page 16 March 18,1995 Business Plan Advertising, Public Relations & Lobbying Advertising The primary promotion vehicle for EAS, at least initially will consist of direct contacts made through recommendations of regulatory agencies such as the EPA. Attendance at trade shows, government seminars, regulatory conferences and industry conventions will all be used to generate qualified leads and contacts. Paid advertising will also be used in applicable trade publications to establish a presence in the market as well as to develop leads for affiliates and prospective clean-up sites. Public Relations and Lobbying EAS has an experienced lobbying group established and in place. It is headed by a well known former EPA attorney and remediation expert who is widely recognized by national and regional regulatory agencies for his work in the remediation area. The groups primary function will be to promote and educate government agencies at all levels about the superior effectiveness of the dynamic stripping technologies and the advantages of specifying EAS's MHRUs for applicable clean-up problems. In addition the group will work to promote the EAS solution to oil companies, insurance companies, banks and government entities with hydrocarbon clean-up problems. The group will also assist affiliates with governmental regulations, site selection and contracts and will act as a manufacturer's liaison for EAS with the DOE, DOD and EPA. Customer Service and Support EAS will provide its affiliates with a full level of professional services and product support which starts with the initial training on product operation and follows with geotech support and professional assistance while in the field. On -going assistance with site selection and governmental regulations will also be offered. Training EAS will provide complete hands -on training for new affiliates covering the theory and operation of the MHRUs and UCBILLNL's dynamic stripping process. An initial training course will be offered at EAS's corporate facility and will conclude with the affiliates actual participation in the factory test run of their own equipment. Environmental Aqua Services Page 17 March 18,1995 Business Plan On -going Support Real -time, on -going geotech support will be provided to each of the affiliates via the computer -based remote monitoring and data communications facilities built into their MHRUs. The EAS geotech staff will continuously monitor clean-up progress at the various sites and assist the affiliates in running their particular clean-up jobs. A particularly close level of technical assistance will be provided initially as the affiliates become familiar with the various aspects and parameters of the technology. In addition, EAS is customer liaison staff will utilize the evolving remediation database to offer assistance in determining proposed clean-up solutions and optimal pricing strategies for prospective remediation projects. Warranty Policies EAS will provide a complete, one -year warranty for the MHRUs and will replace or repair any equipment that fails under normal use during that period and is not caused by misuse or physical damage to the unit. Additionally, as part of the sub - licensing agreement, EAS will provide maintenance for the MHRUs on an annual fee -basis for the lifetime of the equipment. EAS maintenance personnel will be available in each of the designated EPA regions and will provide in -the- field technical assistance, product support and upgrades as required. This maintenance will not only keep the units working at peak efficiency, but will also ensure that system monitoring safeguards are in place so royalty payments can be calculated accurately. Environmental Aqua Services Page 18 March 18,1995 Business Plan Design and Development Plans Development Status and Tasks Over the past 18 months, the company has developed designs, specifications, costs, production plans and production timetables for producing each of the five vans that make up the MHRUs. OEMs have been identified and custom vendors have been interviewed and secured. Manufacturing plans have also been laid out and are waiting for a lease to be signed on a facility to be put into operation. The development support team including an electronics engineer, mechanical engineer and electrical engineer are available to initiate their R &D. A prime contractor and sub- contractors have also been selected, are in place and waiting for a go -ahead to proceed with tenant improvements for the facility. Difficulties and Risks From a development and engineering point of view, the technology being utilized in the MHRUs, except for the software, is presently being used in other applications and is available on a commercial basis. No critical system needs to be invented. Existing equipment and processes will be utilized to produce the MHRUs. The major difficulty foreseen will be in securing an adequate supply of production level components on a timely basis. Most of the components from OEMs are on a 12 week lead time and Van A's stainless steel work requires a 4 month lead. In addition, some of the technology will need to be encased in special housings or adapted for use in the vans and may not be completely off -the- shelf. Engineering/ Development Costs At this time we envision approximately $450,000 in engineering or development costs. Most of this is for proprietary monitoring software which will be copyrighted by EAS. The design and engineering required for developing the MHRUs will be accomplished using EAS personnel and consultants. Environmental Aqua Services Page 19 March 18,1995 Business Plan EAS Operations Plan Geographic Location EAS will locate its headquarters office, geotech data acquisition and manufacturing facilities at Alameda Science City, Alameda, California. Alameda Science City is a community and industrial park being created by regional and national governmental authorities as a result of the base - closure at the Alameda Naval Air Station. One of these authorities and its agency, the Alameda Center for Environmental Technologies (ACET) is sponsoring a world - leading environmental technical center that will develop new technologies, incubate small businesses and provide new jobs for the region. They are now actively seeking environmental cleanup companies, ecological restoration businesses, and water use and reuse and instrumentation companies to populate the closing military facility. As part of this effort, they are assisting start-up companies raise capital and are providing resources and facilities to support and assist with product development and initial low -level production. ACET has identified EAS as its model tenant at the Air Station and is in the process of helping the company obtain facilities. EAS's location at this site has numerous advantages in addition to governmental assistance with facilities and funding. The area has a readily available supply of skilled professionals for the EAS work force; the aircraft maintenance hanger buildings at the location are ideal for manufacturing and assembling the 40' MHRU trailer vans; the base has easy access to multiple modes of transportation for shipping or receiving product. In addition, the developers of the dynamic stripping process at UCBILLNL are part of a $25 million demonstration project with the Navy to help cleanup major hydrocarbon spills at the site. The process developers have expressed interested in using EAS's pilot MHRU system as the device to provide those services. Facilities and Improvements EAS is in the process of obtaining a lease for two of the aircraft maintenance hangers at the Alameda Naval Air Station. The hangers have the uninterrupted floor and overhead space necessary for the simultaneous manufacture and assembly of multiple MHRU vans. In addition, the hangers contain two story office space which is more than adequate for developing the central office facility and geotech lab /training areas required, as well as a data acquisition center. The size of the space is adequate for the production of at least 2 MHRU systems a week which entails the manufacture and assembly of 10 individual trailer vans (5 per system) during that period. Although this production potential exceeds the amount necessary to meet the objectives set for Year 2 of EAS's financial plan, it will he necessary when anticipating EAS's long term revenue goals. Environmental Aqua Services Page 20 March 18,1995 Business Plan A general contracting firm and a team of engineers, subcontractors and security systems people have been lined up to do the tenant improvements necessary to convert the facility from an aircraft maintenance operation to an MHRU production plant. Because EAS has in -house architectural design capabilities, architectural consultants will be brought in only on an "as needed" basis. In addition to manufacturing and central office facilities, EAS is petitioning the Alameda Base Reuse Authority for approximately 10 to 15 housing units which will be used to house incoming/rotating affiliates in training and for other support personnel. This would include US and overseas affiliates, field support (mechanical and electronic, customer support) regional lab and geotech support, compliance and regulatory people from other states/countries, lobbyists, OEM engineering and other consultants. As base facilities are part of the base conversion and cannot be used for collateral, state and local governmental agencies have been enlisted to help defray the cost of the tenant improvements necessary to modify the facility for production. Production Plan The MHRU vans will be produced on assembly lines with work stations where the various stages of the manufacturing process will be accomplished. The vans will move through the manufacturing areas on dollies and exit the facility ready for field testing in one of three test pads adjacent to the hanger building. See Appendix E for a schematic of the production process. The specific manufacturing steps will consist of: • Insulating and skinning the van's shells • Staging the components • Installation of the components • Electro/Mechanical hookup • Quality assurance testing of van's systems • In- ground hydrostatic testing of completed vans EAS anticipates initially starting 4 and finishing 1 complete system during the first year of pilot production and completing 8 additional systems over the remaining year of pilot production, yielding 9 systems produced during the first 2 years of operation. Normal production after that is anticipated to yield 1.5 completed systems per week or 65 to 70 systems a year. Units Produced Systems Sold Systems in Lease Pool Production Plan Year 1 Year 2 Year 3 Year 4 Year 5 Total 1 8 45 6.5 70 189 1 5 15 28 31 80 - 3 30 37 39 109 Environmental Aqua Services Business Plan Page 21 March 18,1995 Production Costs The projected production costs for the MHRU system are estimated to be approximately $1,600,000 each during the initial pilot production phase, falling to around $1,300,000 once normal production starts in quarter #7. This includes direct labor costs for the estimated 3,000 hours or 19 man - months required for each van system assembly and production. Labor Force & Employment EAS will draw employees from the existing labor pool employed and working at the Alameda Naval Air Base. This resource, which includes all types of skilled positions from aerospace engineers to sheetmetal mechanics, will provide an ample supply of skilled workers to meet EAS's specific manufacturing and production needs. Initially, the company will begin operations with 7 staff and 14 manufacturing personnel and will grow to 22 staff and 72 manufacturing employees by the end of the first year. By the end of Year 2, EAS anticipates over 200 employees will be required to effectively operate the company. Staff Headcount Manufacturing Total Year 1 Year 2 30 41 71 187 101 228 Environmental Aqua Services Page 22 March 18,1995 Business Plan Environmental Aqua Services Company Organization Structure The following organization chart indicate the basic organizational structure for EAS during its initial pilot production phase of development. Environmental Aqua Services Page 23 March 18,1995 Business Plan Key Management Personnel & Full Time Consultants EAS has assembled and put in place a strong, experienced management team. The group has worked together over the past two years to develop the company's business concept and have designed a sound financial and marketing program to take the idea to market. • Matthew Maupin - Operations I Production Mat Maupin has 15 years of successful experience developing, building and operating large manufacturing plants in the US and overseas. He is a licensed mechanical contractor with a Business Management and International Relations education and extensive technology transfer experience in the aquaculture industry. He is the lead member of the EAS development team and has guided EAS through technology discovery, business plan development and promotion of EAS interests among governmental agencies domestically and abroad. He will oversee plant development and operations. • Donna Zacamy - Product Development / Customer Support Donna Zacamy has strong organizational and administrative skills which have made her an invaluable member of the EAS development team. She has a clear understanding of all aspects of the company and has been the high level management liaison with outside organizations and companies. She has a BA from Colby College and a degree from Parsons School of Design and has created the plans for the control van, developed the manufacturing and production specifications and secured subcontractors. Her design and small business background will be put to good use overseeing product and factory improvements. • Fred Mauer - Marketing Fred Mauer is a senior marketing executive with over 27 years experience with Blue Chip corporations such as Dow Jones & Co., IBM and their advertising agencies. His background includes work in a variety of industries with emphasis on leading edge or emerging technologies. He has a proven track record launching new products and is recognized for his expertise in translating classical consumer marketing approaches to non - standard situations. • Ron Simpson - Sales Ron Simpson brings a successful sales and marketing background to EAS. He has over 22 years experience in Real Estate Syndication and the Broker/Dealer community and has been consistently one of the most successful marketing vice presidents in the real estate syndication industry. He has hired, trained, managed and motivated a team of 25 high -level sales people and been instrumental in raising substantial money for public and private real estate programs. He will establish and lead the EAS sales team. Environmental Aqua Services Page 24 March 18,1995 Business Plan • Carolee Everett - Comptroller / Finance Carolee Everett has over 20 years experience in commercial banking and has been principal of a successful multi - million dollar manufacturing firm. Currently she heads her own company that develops and coordinates leasing programs for environmental equipment companies. • Randy Mott, Esq. - Government Relations Consultant Randy Mott has been involved in the legal and scientific aspects of groundwater and soil remediation since 1978 and is one of the major speakers on the lecture circuit on groundwater clean up in hazardous cases and underground tank remediation. His industry involvement has lead to contacts at governmental agencies and major companies who are in positions to specify remediation processes or recommend hiring groundwater and soil clean up contractors. He will be a full time consultant for EAS and act as governmental liaison and regulatory advisor. • Gerald Cisneros and John Wilson - Monitoring Hardware/Software Consultants Gerald Cisneros and John Wilson each have more than fifteen years experience as senior engineers in the aerospace electronics industry designing custom test stations, flight hardware and embedded processing systems for guided missiles and satellites. As principals of Global Environmental Monitoring Systems, they will be full time consultants for EAS and design and oversee the electronic hardware and software monitoring systems. • Chief Executive Officer - Under Negotiation • Chief Science Officer - To Be Hired Environmental Aqua Services Page 25 March 18,1995 Business Plan Board of Directors & Advisory Board Board of Directors The EAS Board of Directors will be made up of five members which currently includes the senior members of the EAS management team and the corporate legal counsel. • Matthew Maupin • Donna Zacamy • Brooks Stough, Esq. • (Open) • (Open) Scientific Advisory Board A Scientific Advisory Board will be created as a part of EAS's business operation to keep management abreast of scientific advances and happenings in the industry and to provide product development guidance. The board will consist of academic and corporate professionals who are well grounded in the remediation sciences; the process inventors and developers have been invited to participate. Candidates are currently being solicited. Supporting Professional Services Relationships have been developed with a variety of professionals and specialists who have been involved in the project from its early stages and are available to provide their professional services as required. The following is a partial list: Accounting Price Waterhouse Attorneys Brobeck, Phleger and Harrison Graham & James, Patent Attorneys Financial Model Development Accel Group Engineering Baseline Engineering General Contractor Fuiwiler & James Manufacturing Alusett, Inc. Market Research Briskin Associates Environmental Aqua Services Business Plan Page 26 March 18,1995 Overall Schedule Pre- Production Timetable & Milestones 1993 1994 1995 EAS Incorporated Business Planning Technology Licensing Started Negotiations Underway Product Development State & Local Begun Government Support Technology Transfer Contact Established Proposal Issued Facilities Located Contracted with Management Team GEMS, Alusett Onboard Equity Funding Sales Group Formed Commitment Obtained Board of Directors Established Environmental Aqua Services Page 27 Marcb 18,1995 Business Plan Critical Risks and Problems One of the critical short term business risks for EAS at this time concerns the new Republican controlled legislature and whether they will weaken the Clean Air and Water Act or the enforcement authority of the EPA as part of an effort to reduce government impact on society. If the need for compliance is significantly diminished by the legislature, there will be somewhat less commercial incentive for site owners to clean their properties. Over the long term, however, groundwater and soil contaminated by hydrocarbon will still need to be cleaned. A secondary problem is that EAS management is not presently involved heavily in the science end of the business. They are initially relying on UCB/LLNL personnel for scientific knowledge and for recommendations for establishing a geotech group to provide on -going geotech support to the affiliates. This is a relatively short term problem that will diminish over time as the EAS team gains hands -on experience with the technology involved and the EAS Scientific Advisory Board is formed. A third problem area concerns the economics of cleaning up sites and the pricing of the MHRU service. If the value of a contaminated property including clean up costs is more than the market value of the property, the operator will not chose to clean up the site unless drinking water supplies or other public health issues are at play. EAS will ensure that this consideration is built into the basic pricing structure of the product. Environmental Aqua Services Page 29 March 18,1995 Business Plan The Financial Plan Profit and Loss Forecast A summary of EAS's projected five year operating performance is shown in the following table: Units Produced Trailer System Sales Trailer System Leases Sales of Casings Annual Maintenance Fees Royalties Total Revenues Gross Margin Operating Expenses Operating Income Interest Expense Pre Tax Profit Profit After Taxes Year 1 1 $2,200,000 60,000 60,000 110.000 2,430,000 345.000 1,824,000 (1.479,000) 6,250 (1.485,250) ($1,485,250) Year 2 $11,000,000 990,000 950,000 969,000 1.750,000 15,650,000 6.550.000 3,751,500 2,798,500 250,000 2.548.500 Year 3 45 $34,875,000 11,880,000 5,760,000 5,040,000 6.075,000 63,630,000 25,452,000 8,457,600 16.994.400 1,272,600 15.721.800 $1,682,010 $10,376,388 Year 4 $65,120,000 25,200,000 11,760,000 12,240,000 13.600.000 127,920,000 51,168,000 15,104,400 36,063.600 2,558,400 33.505.200 $22,113,432 Year 5 70 $72,075,000 39, 240,000 16,800,000 19,680,000 21.500.000 169,295,000 67.718.000 21,050,650 46.667,350 3,385,900 43,281,450 $28,565,757 The initial two year investment required to fund EAS's pilot production phase will be $20 million. This will be provided by a combination of $12 million in private funding ($4 million in equity and $8 million in secured term debt), matched by $8 million in economic development funds provided by state and local governments. Approximately $11.2 million will be allocated to working capital, chiefly receivables and inventory. Other allocations include $4.0 million to an equipment leasing pool, $3.9 million to factory and site equipment including extensive number of PC and Mac computers for process control, and $2.1 million in tenant improvements on the facility (costs which could be recovered later in the lease period). Trade receivables are anticipated to offset these requirements by $7 million. The remaining capital balance will fund engineering software development and the additional workers needed to ramp -up pilot production in Qtr 8. Employment at that time will total 228 with 17 new systems in production and 9 completed and shipped. Environmental Aqua Services Page 30 March 18,1995 Business Plan Funding EAS has chosen to closely ally its business plans with the Alameda Naval Air Station Reuse Plan for several reasons. The Reuse Plan has an objective to provide financial funds and other incentives to attract science and environmentally focused entrepreneurial firms. In addition, the Alameda Naval Air Station facility has a long standing historical tie -in with UC Berkeley and the Livermore Labs. In fact, a developer of the dynamic stripping technologies has a $25 million five year government contract to demonstrate environmental technologies at the Alameda site, which can positively benefit the implementation of EAS's business plan. The primary source of the governmental funding anticipated will come in the form of Base Closure funds and other expected state and local matching funds designed to accelerate the Alameda community transformation. Such assistance will be made available as grants for employment, facility cost and utility rebates, and availability of surplus base equipment In addition, as the technology has already been proven in LLNL trials, EAS anticipates the award of a significant remediation contract to accelerate the early success and licensing of the new technology. Based on the extensive discussions and encouragement received to date, this combined assistance level is expected to be in the $8.0 million area. Summary of Funding (First 2 Years -$000) Equity $4,000 Term Loan (IDB $10 M) 8,000 Calf State Training Incentive 500 Base Closure Equipment Reuse 4,000 Base Closure TI Lease Funding* 2,000 Utility Rebates 500 Remediation Contract Net Benefit 1,000 Total $20,000 * EAS anticipates signing a 10 year lease with back -end accelerators to recover TI's This level of funding supports second year revenues of just over $15 million, and a $25 million annual run rate at the end of Qtr 8. A complete remediation system sells for $2.2 million which yields a 40% gross margin by the end of the pilot program. Five and eight year sales projections approach the $169 and $269 million sales level respectively, based on production expansion and growth of the lease base. Approximately 25% of the revenues are anticipated from services and royalties. These estimates are predicated on the production run rate growing to just over one fmished system a week and leveling off at an annual production run rate of 70 systems. Environmental Aqua Services Page 31 March 18,1995 Business Plan Because of the fixed asset nature of the end product, it is expected that much of the investment funds can be secured through normal bank financing, which is anticipated in the plan. This will support a $10 million Industrial Development Bond application by EAS, only $8 million of which is projected to be required at peak cash burn in early year two of operations. The combination of bank and government funding will leverage the planned $4 million of private investment funding received in the initial eight quarters, with adequate profitability demonstrated by that time to support an EAS conventional financing early in year three. The $4 million in private funding would be released through -out the pilot production phase. In summary, public funds would be allocated for the development of the manufacturing facility and initial job training, while private funds would be utilized for continuing engineering development and post pilot production phase ramp -up. Financing Desired Financing EAS has an initial institutional funding commitment and is presently seeking other strategic partner offers for an equity investment in the amount of $4 million. Management anticipates this level of investment combined with funding generated through local, regional and national government agencies and secured loans will be capable of funding the operation of the company from the start-up phase through the pilot production phase and until the business is operating on a profitable basis. EAS expects to achieve profitability and positive cash flow with 8 MHRUs produced, sold to affiliates and working in the field on large clean-up sites by the end of Year 2 of operations. EPA/DOE/DOD Endorsements EAS is actively seeking endorsements and certifications for the process technology from the EPA, DOE, and DOD. Because of the technology's documentable effectiveness and the fact that the initial technology development was sponsored and funded by, the DOE and EPA, and that the DOD has recently selected the process for use in a demonstration project at the Alameda Naval Air Station, EAS doesn't anticipate serious problems getting the process certified or permitted. EAS is also working with state, county and local government agencies including economic development agencies, base reuse committees, industrial development authorities and other governmental sources to obtain start-up funds and assistance. Each of these groups has been enthusiastic about funding prospects and other assistance and have stated an interest in helping the company succeed. The assistance being offered includes base conversion funds and capital equipment, grants, loans, revolving loan funds, retraining funds and other options. All are available and actively being sought. 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U) E C a _ in a) c c . o o (7) t E a ru E E 'no >, m (no 3 p= CC EI It 8 13 CC• c a, rx >_ a) .2.2,2 o a, w c .§ c 2 8 CC o -c .• tx!' co as C -5 co c g c,-,3 E ;1§81T;11 • '8 VI ✓ r 8 . •0 1 I March 18,1995 2. Process Schematics Sal it rn r 0 rn 38OId 3dfl1VJJdW31 W C7' Go 0 14" pi Po on . 0. • • so INZA SYD aammuwvJJ o3aa Z sa4s re0 tuondsosgyr w uoq e3 T sa ;stuEQ w UORdsosgy* w uogsao CA) C, w 14- CA) C• i uotTss$das • cU PrnbTZ N 4P X 0 0 ••• s M X" g A Ea N N N CO cr cgs aopustidos N 4n?m13;1200 w w N -+ iv o p ~ r Erk m N +4- W W � 0 bi O t2i ti Zr' O 1 CO ••• ©Q cn ▪ GI El re p X X CD K o O Environmental Aqua Services Business Plan J Page 38 March 18,1995 n 9 I , C x x r� Ih1;,..1 csadvas � Appendix D Computer Hardware and Software Design Details Global Environmental Monitoring Systems (GEMS) has been contracted as a consulting team to design and oversee the installation of the electronic hardware and virtual instrumentation monitoring software for the MHRUs. The hardware and software will allow a network of hundreds of MHRUs to monitor their awn clean-up operations by giving operators the information they need to maintain safe and efficient progress in the subsurface remediation at their site. In addition, the equipment will provide facilities for daily transmissions of monitoring information to one of two centralized geotech processing facilities operated by EAS. DATA COMMUNICATION PATHWAYS Washington AFFILIATES OFFICE FAX Internet Network System Lawrence Livermore ( LLNL ) Personal Pager / Telephone 410HUniversity of California Berkeley Backup Processing Center • • • / Modem Redwood City, CA • The monitoring system uses dual fault - tolerant acquisition subsystems to collect multi- sensor data (temperatures, pressures, flows, fluid levels, vapor & soil analysis, weather and Environmental Aqua Services Business Plan Page 40 March 18,1995 Appendix F Vapor Extraction as a Remedial Technology Hazmat World, February 1994 Environmental Aqua Services Page 43 March 18,1995 Business Plan Closure strategies for soil -vapor extraction systems BY M.AITHEw L McCuunuGH AND J.R. MoRiurro USE OF VAPOR EXTRAC i ION AS REMEDIAL TECHNOLOGY has expanded rapidly, because it is simple and relative- ly easy to install using off - the -shelf equipment. The technology is flexible and can be implemented in subsurface (in situ) or aboveground applications using one of several design. op- tions (Figures 1 and 2). oug contrac ors na tinely install vapor extraction systems, a sig- nificant number of have experienced serious difficulties in applying the technology. Prob- lem systems are seemingly endless in their operation, and some ultimately have been closed by excavating remaining soil and dis- posing it offsite. Although the equipment involved is sim- ple, the proper design, operation and mon- itoring of vapor extraction systems are not trivial matters. In practice, many system in- stallations are based on the most readily available equipment and are fie neered, rather than design- based. he pre - ommance o tna -an. -error ins allations has led to a significant number of vapor ex- traction installations that operate inefficiently or fail to work. The basic question of technical feasibili- ty is complex and open to much uncertain- ty. Design criteria — such as the optimal number, location, and spacing of extraction or injection wells; depth to groundwater, op- timal vapor - treatment system; and appro- priate degree of operational monitoring and control — can be difficult to determine. Shal- low groundwater can prevent effective sys- tem operation, and groundwater upwelling can cause contamination to spread to ground- water or groundwater to block the air flow in contaminated soils. Design theory. The basic physics behind vapor extraction are straightforward: A Figure 1. Typical vapor extraction system Air/water separator Vapor flow Vapor flow vacuum applied to the soil induces vapor flow, and evaporation of the contaminant causes migration into a passing vapor stream. In a mixed chemical spill, more volatile compo- nents are removed first. As time passes and the more volatile components are removed, the total vapor concentration (for example, of hexane) decreases. Three sets of factors control the perfor- mance of any vapor extraction system. These are: • The chemical composition and physical properties of the chemical; • The amount of air flow that can be in- duced through the contaminated soil; and • How far the air will flow relative to the contamination. Contaminant plumes composed of volatile (more than 1 millimeter mercury vapor pres- sure at 68 degrees Fahrenheit) chemicals are excellent candidates for vapor extraction. Less volatile chemicals cannot be extracted easily or quickly. Sandy, highly permeable (greater than 1 darcy) soils provide the best air flow for vapor extraction. Less permeable, "clayey" soils are more difficult to remediate using the technology. Air flow directly through the con- tamination is ideal and is accomplished by using an appropriate number of properly placed wells. The primary function of any vapor ex- traction system is inducing air to flow through the contaminated zone. Ideally, the air con- tacts the contamination; distance vapors must travel to be swept into the extraction- system air flow is minimal. If extraction - system air flows several feet from the contaminated zone, the vapors must migrate by diffusion into the passing air, increasing remediation time (see Appendix). From design to practice. The techno- logical basis for vapor extraction should be used only as a rough gauge of applicability. Several other, more difficult to quantify fac- tors can be equally significant. Remedial ob- jectives, budgetary constraints, physical bound- aries, political pressures and permitting issues are all relevant to remedy selection. Ultimately, such parameters as minimum levels of system monitoring are driven by regulatory concerns, rather than being design considerations. In- formation necessary for a proper vapor ex- traction feasibility study, design, installation and monitoring program is summarized in Environmental Aqua Services Business Plan Page 44 March 18,1995 Figure 3, along with approximate costs for a "typical" 2- to 5 -acre site where groundwater has not been affected. Site closure is the primary goal of any re- medial treatment system. Closure can be achieved only when residual levels of chemi- cals in the soil are acceptable to regulators. However, soil sampling can be expensive; ide- ally, sampling should be conducted when the extraction system has completed operation. Thus, a key issue is determining when the sys- tem should be turned off. Several options based on design considerations and opera- tional parameters can be considered before shutting off a system. These include: • Conducting a laboratory treatability study; • Performing soil-vapor surveys; • Verifying proper system installation; • Performing a mass - balance evaluation; • Periodically evaluating system operation; • Periodically sampling system influents to analyze changing compositions; • Operating the system cyclically; and • Monitoring subsurface oxygen and car- bon dioxide concentrations. Laboratory treatability studies can provide information on theoretically attainable cleanup levels, approximate cleanup times, the likeli- hood of biological activity that could remove less volatile constituents and the presence of biological inhibitors. Initial characterization of a vapor plume using soil -vapor surveys provides the basis for a quantitative evaluation of how much of the plume shrinks over time. Such information also can be used to locate "hot spots" where extraction can be focused. It is preferable to use semipermanent vapor probes to conduct soil-vapor surveys; however, soil extraction or injection wells can be used as alternative mea- suring points. System operation is near com- pletion if, a month following shutdown, the vapor plume does not increase in size. Although verifying that a system was in- stalled properly appears to be a rudimentary exercise, such evaluations can provide infor- mation critical to closure. It should be veri- fied that the system meets or exceeds the pre- viously characterized extent of impact. The individual influences of wells, and flow and ex- traction rates should be evaluated relative to design rates and optimized. This also provides a benchmark against which the system's ex- traction efficacy can be compared. A rough calculation of the amount of ma- terial removed, compared to initial contami- nant estimates is one indicator of system progress; however, some contaminants are not adsorbed well by soil and exist primarily as va- pors. Thus, calculations of extracted mass may exceed initial calculations based on soil sam- pling. A combined soil - and -vapor mass bal- ance will be more effective in such cases. Remediation systems are dynamic. Such parameters as soil - moisture content, ground- water levels, seasonal flow variations, desicca- Figure 2. Vapor extraction system design options Vacuum pump ■y► To vapor treatment (A) Vertical well screened in the contaminated Air inlet vents (B) Aboveground treatment cell _. Structure Well screen illliltltlllllllt., (C) Hoeizontal well - Surface seal (o) .Trends= Environmental Aqua Services' Business Plan Page 45 March 18,1995 Soil -vapor extraction tion and fracturing of clayey sediments, and soil microbiological activity change seasonal- ly and during system operation. A periodic (every three to six months) reevaluation of sys- tem configuration and operational parame- ters will ensure that the system continues to operate optimally. For most vapor extraction systems, a sim- ple organic vapor analyzer is sufficient; how- ever, a periodic evaluation of vapor con- stituents using laboratory analyses provides key information on system progress. Such methods as EPA Method 8240 offer excellent insight into changing chemical parameters. A trend towards less volatile chemicals indicates remediation is progressing. During initial phases of operation, conta- minant removal rates tend to be high. Vapor - phase contaminant concentrations later de- crease significantly. At this point, the system should be shut down and restarted at a later date. If vapor -phase concentrations recover significantly ("spike"), system operation should continue to be cycled on and off. Figure 3. Information required for a vapor extraction feasibility study, design, installation and monitoring Operation Necessary information Comments Typical costs Site characterization Subsurface characterization: • Soil stratigraphy • Distinct soil layer characteristics (permeability estimates, soil types) • Depth to groundwater • Groundwater gradient • Seasonal water table fluctuations • Aquifer permeability (estimate) • Subsurface and aboveground temperature Contaminant distribution: • Extent of free -phase contaminant • Contaminant distribution in unsaturated (vadose) and saturated zones • Extent of soluble contaminant plume ' • Contaminant composition • Soil -vapor concentrations ..,., n used to assess if vapor Costs associated with site ixtraction is a feasible technology Vi investigations can be relatively `orthe site, high, depending on the complexity of the site and size of the contam- : inant plume. Costs commonly range from $50,000 to $200,000 or more. Venting feasibility study Estimate contaminant removal rates, vapor flowrates, and final contaminant levels and composition. Provides a rough estimate for assessing whether vapor extraction can meet general guidelines for site remediation. Air permeability test Measure air permeability of distinct soil layers, radius of influence of extraction wells and initial vapor concentration. Costs, depending on the complexity the site, range from $5,000 to - $20,000. Specific information used for final system design. Typical costs range from $10,000 • -, to $20,000. . Groundwater pump Measure groundwater drawdown, radius test of influence and pumping rate. if groundwater is affected or is shallow, this test may be necessary to design a separate system for treating or preventing groundwater contamination. Typical costs range from $5,000 to $50,000. System design Design parameters include: • Number of extraction wells • Vapor well construction • Vapor well spacing • Air inlet wells Monitoring and instrumentation -*Vapor treatment • • Flowrate and vacuum specifications • Groundwater pumping specifics System design should be quantatively based. Software to assist in the design is available from EPA. System installation Install the designed system. Considerations include equipment enclosures, underground or aboveground piping, and treatment system acquisition. Field modifications should be made in conjunction with the design engineer. Typical costs range from $10,000 to $40,000. ' Typical costs range from $100,000 to $300,000 (which includes the - vapor treatment system). System operation and monitoring Options include computerized operation or a system that is read manually. Operational and monitoring require- ments usually are regulatory driven. Typical costs range from $3,000 to $10,000 per month. System shutdown Confirmatory sampling, reporting and negotiation. Consider total contaminant recovery, cyclic operation and recovery, subsurface oxygen, or soil -vapor concentrations. rw Verification of conditions for shutdown usually takes several months. Typical costs range from $15,000 to $100,000. Environmental Aqua Services Business Plan Page 46 March 18,1995 During system operation, biological degra- dation of contaminants typically increases. Mi- -oorganisms that use organic chemicals as a d source also use oxygen and respire car - ,,on dioxide. Subsurface oxygen levels increase during cleanup due to increased subsurface air flow. Continued high subsurface oxygen lev- els following a reasonable shutdown period indicates that the microorganisms' food source (the contamination) is gone. Ultimately, soil sampling is necessary to confirm site closure. Biased, or hot spot, sam- pling can be used to confirm that contami- nants have been removed; however, unbiased or random sampling may be necessary to ver- ify closure. Technology enhancements. There are several "twists" to vapor extraction technolo- gy. The ones considered most often are air sparging, dual extraction, bioventing and heat addition. In some applications, chemicals also must be removed from groundwater. Air sparging combines soil- and groundwater-remedia- tion technologies. Air is injected below the water table and bubbles up through the aquifer (Figure 4). Chemicals are stripped from the groundwater, and biological activ- ity is enhanced as dissolved oxygen increas- Figure 4. Vapor extraction with air sparging Vapors Air` injection Vapors es. This technique has been successful in re- mediating groundwater; however, it is ap- plicable only at sites where groundwater is unconfined and air flow is unrestricted. Air sparging must be controlled properly to pre- vent spreading of the contaminant plume. and to alleviate health and safety concerns. Closure of air sparging systems requires ex- Hot -spot solution A former newspaper printing facility in EPA Region IX was located within the boundaries of a Superfund study area. Considerable documentation was necessary to remove the site from consider- ation as a contributing facility. The project team was assigned to take over a vapor extraction system that had been installed and operated by others. The system had operated for about two years, and there was no apparent end to system operation in sight. The system was installed to remediate chlorinated solvent contamination beneath a 100,000 - square -foot industrial facility. No formal design had been developed for the field - engineered vapor extraction system. Baseline monitoring had not been conducted, and no yardstick was available to measure system progress. Reg- ulatory monitoring requirements were excessive and expensive; monitoring was being conducted using SUMMA canisters, and full laboratory analysis was performed weekly for each well. Final soil cleanup levels were set at 1 part per billion, a goal not easily attainable by any in situ technology. The takeover project team conducted a design evaluation consisting of operating the system in var- ious configurations to determine the areal extent of system coverage and optimize extraction rates. tt was determined that the contamination was localized in one hot spot, and system extraction subse- quently was focused there. The team made a distinction between monitoring for operational efficacy and analysis that would be required for confirming closure. This negotiated distinction allowed eliminating the use of SUMMA canisters and certified laboratory analysis for routine monitoring. Using a strict protocol for handling Tedlar bags was helpful in reaching this accord. A closure strategy was proposed to the lead regulatory agency and accepted. The strategy involved using several indicators for system closure, including: • Validation of system design and configuration, and operating data; • A definition of system conclusion (asymptotic, extracted vapor concentrations) with "limited" re- bounds after prolonged (one - month) shutdowns; • Constriction of the soil -vapor plume, using a baseline soil -gas survey to establish a starting point; and • A general framework for setting soil cleanup levels using a health -based risk approach, and cen- tered on the premise that existing cleanup goals were unrealistic and unattainable. System operation continued about three months before asymptotic behavior was demonstrated. The system was shut down, then restarted after about three months. System vapor concentrations were monitored closely to quantify concentration rebound. Although a small spike was measured, system concentrations generally were low. After another two months of operation, the lead regulatory agency agreed that the system appeared to have concluded operation. Final soil sampling is pending final ap- proval of the sampling plan. Site closure is expected within six months. tending all parameters to groundwater issues. Dual extraction may he applied to sites where groundwater, as well as soil, is conta- minated. Dual extraction combines vapor and groundwater extraction wells. At sites charac- terized by low- permeability soils, significant increases in groundwater extraction rates can be achieved by pumping under vacuum. As with air sparging, closure of a dual system ex- tends all parameters to groundwater issues. Biological degradation of contaminants in- creases during vapor extraction. The usual limiting factor for bioremediation is subsur- face oxygen; an increase in air flow increases subsurface oxygen dramatically. In biovent- ing, air flow and nutrient addition can be con- trolled to optimize biological activity. This process is essential to degrading less volatile components of a petroleum spill and more soluble components of a chemical spill. Clo- sure of bioventing systems includes monitor- ing microbial metabolic constituents, such as oxygen and carbon dioxide. Vapor extraction is applicable only to volatile chemicals. Because chemicals become more volatile at higher temperatures, raising subsurface temperatures increases extraction effectiveness. In theory, this may be accom- plished by injecting hot air or steam. A more recent, but relatively untried, enhancement involves using radio - frequency heating. Heat addition is difficult to implement in practice, because — compared to soil — air cannot carry much heat, and steam can condense to form saturated soil (mud), reducing air flow and system efficiency. Monitoring for systems using heat addition should address hr sin! tem- perature differentials and gradients. and ef- fluent temperatures. Vapor extraction is a versatile remedial tool. Because of its simplicity. it is relatively forgiv- ing to inexperienced practitioners. Knowing when to close a soil -vapor extraction system essentially consists of having sufficient data to state that the system was installed and oper- . aced properly, and that system operation is Environmental Aqua Services Page 47 Business Plan March 18,1995 Soil -vapor extraction complete. However. this is not a trivial exer- cise. The most effective and least costly sys- tems are designed and operated by experi- enced personnel with a thorough knowledge of the technology's basic processes. IF More reading: Amyx, J.W., D A I. Bass Jr. and R.L. Whit- ing, Petroleum Resent oir Engineering— Physical Properties. New York \ IcGraw -Hill Inc., 1960. Fetter, C.\V, Applied Hydrogeology, 2nd ed. Columbus, Ohio: \Terrill Publishing Co., 1988. Johnson, EC., \ I.t'1. Kemblowsld and J.D. Coltharr, "Quantitative analysis for the cleanup of hydrocarbon - contaminated soils by in -situ soil venting," Ground hater, Vol. 28, No. 3, 1990, p. 413. Johnson, P.C., C.C. Stanley, M.W Kern- blowski et al., `A practical approach to the design, operation, and monitoring of in situ soil venting systems," Groundwater Moni- toring Review, Vol. 10. No. 2, Spring 1990, pp. 159 -178. Marley, M.C., "Case study on the appli- cation of air sparging as a complementary technology to vapor extraction at a gasoline spill site in Rhode Island," Proceedings of I iMC Great Lakes '90. Silver Spring, Md.: Haz- ardous \ Iaterials Control Research Institute, 1990. Middleton, M.C. and D.H. Hiller, "In situ aeration of ground water — a technology overview," Proceedings of the Conference on Prevention and Treatment of Soil and Groundwater Contamination in the Petrole- um Refining and Distribution Industry. Mon- treal, 1990. Environmental Aqua Services Business Plan Page 48 March 18,1995 SUMMARY .”: .:-..' LI t. 7: = ..rn _ = ; ,,, TS, '9:- 2 2 •-,i i-', zi - , 1.. S E :,.., :,.... -;: v.. ,;.? :• . L ..) . •• - - • •• - :.•.: r : _ • ..< y Brluunl ('nlilnmin 94002 411, 00'1 7000 (ism) 41S 002 7004 ? ? ? • z :.• - .... ,.... = ..... .. .4.4,5 5 ,,, — -• '. " ::= ? cr al 0 CC — Cs: VI al ^- CI I?AS Business Ilan ua Services Environmental A Projected Financial Statements .�'yyyf' QO O O o N oo .r 4�) ' 49, 61 `" N ▪ N Np p pp O v C cstO1 M CO >b CO h m as W W WN W W 44. 44 49 W W N49 S 8 0 R :'1 C- T C :) C CO 00 r.. ^ 1) C h `. m CV nj - .. nj h 49 49 49 W N. 004400 W W N. 9 E 9 5 S VI S t B 416 802 7000 (hod 416 802 7004 Requirements 8• °;8 8R`- O - CO • V O N') • 0 8 V O J 2 • O Co t )h. O ') O �A '4V, 4n 8 5 • N. V 7 Y, C P Co N. N N 44 W W 49 W 44 0 44 44 44 41 N. 44 0 44 41 49 O O C O) M 0 4 ' 0 0 4 ^ 0� 33 84» M 0, h 2$N� �p ON� C .o m 8 • 5 47 Cl Co l7 Q a !) C) a Co Ni 44 44 44 444944 W 417 p Nry C N N - :n o C N 4D O 4n N 66 N Lfi < W 41 49 44 49 W 49 49 44 44 44 44 W 44 4, 44 44 44 44 44 N 44 N W W, G. 41 N 4O �% CO C ? ES j ) 8 5 a C N e) N P) Co S 4'.:$ �j Co '_ t0 S tC t�C') N 0-m= O Co N S n S. N 4,7 h N - ,c5 - E - h N v- N 44 49 49 49 41 W W W 49 W W W. O .!'.hti- 8 0O 8 CO ■ O 5 C N N gig Co CO C N NV 4) CO 49 49 W W W 5 • CO c CO O Cl 4 5 NV C W 49 44 44 49 O a.- • c 4) .t) h h NX' 44 44 44 44 W 8 -4z O O C - h O. O - C• 49 49 44 N 44 N 7 O) 3) .24 R G N M SOURCES OF FUNDS 44 44 44 44 A (note: Mixture of loan vs grant a 49 W N 44 44 49 8 8 • gOV CO Cam) c 5,31,0,678 $ 49 ' 49 49 49 W 49 4,9 O O ,e. O O 4) _ 5 C 28 C Q ^ 5 76.0. O .A t O N h C 1 49 49 49 49 49 49 49 H 8 X -8 2 5. x X NC 5 N) Y r c J 8 49 49 49 49 49 49 49 O C O 'O o 0 C' X828t� = __ 41 � 8 C P) N S 49 W 49 49 49 49 64 Teen Loans ettAI SOI111CFS APPLICATION OF FUNDS 44 44 W W W 0 W W W 41 44 W W. 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' ZE '. .- ,Y<..: c 7. . .. .7P0, - 4 -4t2 , = o'4P 0 - 36 E6_ -i s1 .th 7 t ; i . ,, A1. ..) . i. 2 "a 1 8 -2 --2--'6Pe",v7E%i.l.,7:E7.1::t.,2,..,.::-.-_,g- 4444 49 60 8 33' /38.5(X) $ 49 4463 44, 64 44 4449 44 4r NAS Site Block Diaoram U «< Offices »> «� (dices >» k <f eiimeter Security renclnq»1 •J7 r. Y{ e s � a P ▪ s — ' E E 0 w • a 8 ooO f pEp E E pE. N p E S O 0 0 0 0 0 0 0 E a 8 N w N N N N C S 8 § § J • h • g 0 0 0 0 0 0 0 0 4 1 0 0 0 E E$ E V C b Xx O z o C S J' N w N 44 w w C: N w N N N C: w w t 71 R ss A 115 0 8 S 120,630.000 /6./52.(H10 $ N h O Og 85 E ....... N N N w w N N 99 13, 5 N N N 8 )1i o v r C' N N N N .4 0 0 0 0 0 0 0 N 3 h N n A h w w E E E E E E g s ° g h tG Cu N ' {p g w 0 0 0 0 0 0 0 N Q t7 C: C ^ it N 0 0 0 0 0 0 0 GC N w N N N G E E E E E E E 0 0 0 0 0 0 0 E E E E E E E 0 0 0 0 0 0 N N rr en N N N a .4 G 8 Q h 8 N N 8 � R QN V 17.280.670 S 2.668.400 S 11.391.768 S N c. (1,4R5.25()) $ S,s5. V 39.399.426 $ 28.565.757 $ 33,544.830 $ w C, C, 1,362.240 $ 5 N N N N w N w w 0 g C C 41 1G 8 N 0 1'614 tiler 'I nx E� ° R = 8 o 6 V= Q 88 k B m Q N h N+ O Alameda Reuse and Redevelopment Authority Inter - Office Memorandum May 31, 1995 TO: Honorable Members of the Alameda Reuse and Redevelopment Authority FROM: Kay Miller, Executive Director Alameda Reuse and Redevelopment Authority SUBJ.: Report from the Executive Director Recommending Support. for SB 1180 Relating to CEQA Reform for Military Base Reuse Plans Background: Last year, the City of Alameda adopted a resolution in support of SB (Senate Bill) 1971 that would have established the operating base, rather than the closed base, as the baseline for evaluating environmental impacts of reuse as the basis for CEQA (California Environmental Quality Act) review. Unfortunately, this legislation was not adopted by the State; however, similar legislation, SB 1180, has been reintroduced. Discussion/Analysis: California communities undertaking base reuse planning are subject to comply with all the requirements of the National Environmental Protection Act (NEPA) as well as CEQA. Reasonable streamlining of environmental review which maintains adequate review of environmental impacts is needed to help communities move forward to recover from the severe economic impac: of military base closure. SB 1180 allows California communities, for the prei aration and certification of a military base reuse plan, to use the physical conditions that wet : present at the time that the base closure decision was made final as the baseline for evaluating environmental impacts of local actions to accomplish reuse of closing military bases, (i.e. a fully active base rather than closed, vacant facilities). This proposal recognizes the level of use placed on the property throughout. rece.'t history, (i.e. vehicle traffic, commercial operations, etc.), rather than establishing the'artificially low activity level of the closed base as . the basis for tile CEQA review. Some environmentalists opposed SB 1971 and may oppose SB 1180. SB 1180 sets out a public disclosure and review process to ensure that the lead agency's documentation of baseline conditions accurately reflects the physical conditions present 'at the time that the federal decision to close the base became final. SB 1180 would have no effect on the requirement to remediatc toxic contamination - which is governed by other statues. Honorable Members of the Alameda Reuse and Redevelopment Authority May 31, 1995 Page 2 SB 1180 would help expedite preparation of the EIR (Environmental Impact Report) required by CEQA by also allowing the EIR to aclol t the federal EIS (Environmental Impact Statement) required by NEPA. The Navy is required to prepare an EIS to evaluate the impacts of a base clo:,ure. Currently, the Navy uses preclosure conditions as the baseline for evaluating impacts of reuse in the EIS.. Although State law encourages preparation of joint documents or use of the EIS as an EIR, this will be more difficult or impossible if State law does not allow California communities to use the same baseline. The nature of the base closure process is that the level of military activity is usually dramatically reduced before the community can gain control of the site and work on replacement /interiin uses. This places communities addressing base reuse at a disadvantage with respect to private sector redevelopment which often can maintain existing use of the site while planning for the future use. Private sector development is then able to use the existing level of activity as th baseline for environmental review. Specifying that level of activity at the time of the closure decision as the baseline for environmental review is a reasonable measure that recognizes the unique process of base closure. Budtret Consideration/Fiscal Analysis: The ARRA and the City of Alameda would save significant resources and exp•. dite the reuse of the base if the CEQA requirements are modified by this proposed legislation. With this legislation, the EIS can, with supplemental information, be adapted to satisfy the CEQA requirements for an EIR. Recommendation: It is recommended that the Alameda Reuse and Redevelopment Authority (ARRA), by motion, authorize the Executive Director to send letters or testify on behalf of the ARRA in support of SB 1180. Respectfully submitted Kay Miller, Executive Director Alameda Reuse and Redevelopment Authority Attachment: SB 1180 COMPUTER DISTRIBUTION Filled Requests June 1, 1995 School /Organization Afghan Suport Agency, Alameda Alameda High School, Alameda Castlemont High School, Oakland Encinal High School, Alameda Fred Finch Youth Center, Oakland Girls, Inc.of Alameda County, San Leandro Lum Elementary, Alameda Oak Center Cultural Center, Inc., Oakland # Requested # Filled 1 2 8 15 15 2 5 2 St. Theresa School, Oakland 10 United Pilipinos of Alameda 3 1 2 8 15 15 2 5 2 10 3 Woodstock Child Development Ctr Alameda 5 5 TOTAL 68 68 COMPUTER DISTRIBUTION Partially Filled Requests June 1, 1995 School /Organization # Requested # Filled Alternatives in Learning Institute, Oakland 15 7 D.C.A.R.A., Hayward 20 10 Dublin High School, Dublin 40 10 George P. Miller School, Alameda 30 10 Havenscourt Junior High School, Oakland 30 15 Henry Haight Elementary, Alameda 17 10 Lao Family Community Development, Oakland 20 10 Lincoln Middle School, Alameda 35 15 McClymonds High School, Oakland 100+ 15 Oakland Technical High, Oakland 250 21 Our Lady of the Rosary School, Union City 12 4 Robertson Continuation High School, Fremont 30 10 St. Bede School, Hayward 30+ 15 St. Felicitas School, San Leandro 48 20 Tracy Joint Union High School 15 10 TOTAL 692+ 182 C C. AMENDED IN SENAir MAY 15, 1995 AMENDED IN SENATE APRIL 25, 1995 SENATE BILL No. 1180 Introduced by Senator; Haynes and Dills (Coauthors: Assembly. Members Bowler, Olberg, and Richter) 14ebruary.. 24,1995 An act to add Section 2108a8.1 to .the Public Resources Code, relating to envi onnaental go ty. LEGISLATIVE cotrscr.r:s DIGEST SB 1180, as amended, Haynes. .e.:nviron-rn ental quality: military base or reservation reuse plan. Under existing law, the California Environmental Quality Act, a lead agency, as defined, is required to prepare, or cause to be prepared, and certify the completion of, an environmend impact report on any project -which it proposes to carry out or approve that may have a significant effect on the environment, as defined, . or to adopt a negative declaration if it finds tit the project will riot have rh2t effect, unless the project is exempt from the act. Existing law, until January 1, 2001, authorizes the leae. agency to utilize a-n environmental impact statement prepared pursuant to federal law as the environmental impact report for a federal military base reuse pInn, as defined, if specified conditions are met. This bill would provide that, when preparing and certify-7 rn enyis inmental in2parrtt report for a rnflitary base co i 1 Cr) C) ,^ .-, ' c^ U rZQ Q�O C,3 � ! , 3 N 1�. t) 0 ra cO i em C: ' 4) C.O CJ -, 0 :N �1 7 1 1.1 O >u . �% __: N y J ^ ▪ `" . • • U a J O L ac., T " i : O ) 4 rn ■Ci J ) 4 ; F U t U „. O 5 0 " i G CI CA rli 4- O :f O cu O : + U v ) U Q c w C) G' G cu 0 .G LU U ,, ,u G • ct>i` U a 8 C -..-;.1 0 C,: ° g ue L 3 c �� ' ` t <n ^r C� 0., a3 O • Gj ' N Q) O ll ' n S J Gtr -` O , O r (1,, G C : N 8Ell °,0 UiII F3 il g 4 ..C1 ►�_ 4) .0 c4; o g o o�0. e,J. cs � .4 � �' p,, � o --al S *i X43 "g C o -2 ' 1 g.). 849 § Ir, 45--. g 1 Pa bz . s. en Q) O a5 O 0 1 cg, GI m m ' 3 .�. 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O 44 r1 °° ' 1. z� A 2 g 0 o ro a , 2 o v � .d , n,0 V, .E g'g.5 °` 5 ° 5 5-,3 .5.0 ua'E 4 5 g ° 'i,.2 2 ga2cn0 M - iClc7- au)ct�r.mcnca..Nr�v4P )1I% CO -1r-4 - mrnc- N4 Cl CVC41CCVC41CVCVCr)C c) C") V) CO c")c�7Mac+ Alameda Reuse and Redevelopment Authority Inner - Office Memorandum May 31, 1995 TO: Honorable Members of the Alameda Reuse and Redevelopment Authority FROM: Kay Miller Executive Director Alameda Reuse and Redevelopment Authority SUBJ: Background: Report from the Executive Director on the Request from the Arms Control Research Center for the Use of Buildings and Facilities at NAS Alameda for the Bay Area Ship Recycling Complex (BASRC) and Request for $50,000 as a Grant or Contract or In- kind Services for Preparation of the BASRC Detailed Business Plan The Arms Control Research Center (ARC) presented to the Alameda Base Reuse Advisory Group (BRAG) an executive summary of the Bay Area Ship Recycling Complex (BASRC) for review in August 1994. ARC requested expressions of support, (endorsement) for the proposed project from the Base Reuse Advisory Group (BRAG) and Alameda Reuse and Redevelopment Authority (ARRA). ARC has also requested the City of Alameda/ARRA sponsor the effort by contributing $50,000 as a grant, contract or as in -kind services to help develop the project's detailed business plan. The total cost for development of the Business Plan is $500,000. The BRAG reviewed the ARC ship breaking proposal through its subcommittee process. At is regular meeting of May 10, 1995, the full BRAG recommended that the proposal not be endorsed. Discussion /Analysis: The proposed project consists of preparation of a detailed business plan for the BASRC including: organizational structure, procedures for the conveyance of ships, preliminary negotiations for ship disposition, a financial plan for capital needs and operating expenses, development of a monitoring procedure to ensure hiring of displaced workers, development of lease agreements, and compliance with relevant environmental land use and regulatory requirements. The proposed ship breaking (recycling) complex involves a process of five overlapping operations including: 1) removal of equipment, parts, fittings, etc.; 2) abatement of hazardous wastes; 3) cutting of hulls into large blocks; 4) processing of materials for scrap; and, 5) marketing parts and materials. Honorable Members of the Alameda Reuse and Redevelopment Authority May 31, 1995 Page 2 These activities are proposed to take place at three base closure sites regionally -- Hunter's Point Shipyards in San Francisco, Mare Island Ship Yards in Vallejo, and Alameda Naval Air Station. The exact type and location of each of these five land use activities have not been specified in the executive summary of the proposed project. The proposal also identifies two East Bay companies (Sims -LMC and Schnitzer Steel) who have scrap facilities that could also be incorporated into the plan. Sims -LMC and Schnitzer Steel are located in Oakland adjacent to the Oakland /Alameda Estuary. The proposal states that BASRC will assist private industry in achieving the highest environmental standards in the operation of ship breaking activities. Specific "potential" environmental hazards are not identified nor are the specific mitigation measures. The ARC proposal for ship breaking proposes to create jobs in the Bay Area with special consideration for ex -base workers. The exact number of jobs to be created in Alameda is not specified in the Executive Summary. The exact type, location or intensity of uses identified for NAS Alameda are also not identified. While the plan has many excellent goals, the details for the development proposal still need to be studied and developed. Of particular concern are details of the type, intensity, and location of potential ship breaking activities that could occur at NAS Alameda. What are the hours of operation, what piers, storage and lay -out space would be needed? What are the potential environmental impacts (toxics, shipping, traffic, noise, dust, etc.) and how would these be mitigated? What are the hours of operation, and how many jobs would be created? What is the land use relationships and compatibility issues for both short term uses and long term uses for NAS Alameda? These and other details would be answered as part of the detailed business plan. The proposal states: "A detailed analysis is- needed to design the optimum configuration of the project." - (ARC Executive Summary, Page 10). Presently, there are no similar, large scale ship - breaking facilities or uses at NAS Alameda. Both Hunter's Point in San Francisco and Mare Island in Vallejo have the necessary ship yard facilities and experience for this type of operation (dry docks, ship yards, cranes, storage and lay -out space, machine shops, etc.). CEQA Compliance: Approval or disapproval of the ARC proposal in concept would not constitute a project under CEQA guidelines. Approval of the proposal in concept does not: constitute issuance of a lease, permit, license, certificate or other land entitlement; and is not an activity undertaken which would result in construction, clearing or grading of land, improvements to structures, amendment to zoning ordinances, general plans or elements of plans. In addition, the ARC proposal is to prepare a feasibility and planning study for possible future actions for a proposed ship breaking industry and is therefore "statutorily exempt" under CEQA Guidelines (Article 18. Section 15262). Honorable Members of the Alameda Reuse and Redevelopment Authority Fiscal Impact: May 31, 1995 Page 3 If implemented, the reuse of buildings and facilities at NAS Alameda for ship breaking types of uses could have both, significant positive and negative impacts on funding for the Alameda Reuse and Redevelopment Authority and the City of Alameda. The financial analysis in the Interim Reuse Strategy indicates under the best possible scenario the ARRA will be operating with a deficit in the first five year period. Depending on the lease rates, and the terms and conditions of a lease, this use could provide a portion of the necessary funds to maintain a positive cash flow to the ARRA and the City. While individually leases may have a small financial impact, cumulatively the impacts could be substantial. It is imperative that the ARRA get the best deal possible with this and other interim reusers. Each new lease should at least "pay its own way" in order to not put a significant financial burden on the ARRA, the Navy or the City of Alameda. ARC has requested the City of Alameda/ARRA to help fund this project. The ARRA has no funds available at this time to fund additional studies or proposals. All funds for existing studies are provided by OEA and the City of Alameda. All project funds from both the City and the ARRA are committed for this fiscal year. Alternative Actions: The Alameda Reuse and redevelopment Authority can take three basic alternative actions: 1) The ARRA can endorse the ARC Ship Breaking Proposal (BASRC) in concept requesting additional details and specifics to be submitted and reviewed at a later date; 2) The ARRA can find that the proposed use is in appropriate for interim or long term use at NAS Alameda and not endorse the project for NAS Alameda; 3) The ARRA can postpone the project endorsement and ask that specifics of the ARC proposal be resubmitted for further consideration at a later date for a more thorough review and analysis. In addition, the ARRA may take separate action on individual parts of this proposal. Honorable Members of the Alameda Reuse and Redevelopment Authority Recommendation: May 31, 1995 Page 4 Staff recommends that the concept of the Ship breaking proposal be endorsed in concept for the Bay Region (alternative #1), and that specific reuse of NAS Alameda for ship breaking be postponed until additional details can be presented on the specifics of the reuse at NAS Alameda; in addition, staff recommends that ARRA not allocate funds for the detailed business plan at this time. Respectfully submitted, Kay Miller, Executive Director Alameda Reuse and Redevelopment Authority DPT /dpt Attachments: ARC Proposal THE BAY AREA SHIP RECYCLING COMPLEX: NEW JOBS FROM OLD SHIPS A proposal for an interim use project to employ workers impacted by the closure of the Hunters Point Naval Shipyard, Alameda Naval Air Station, and Mare Island Naval Shipyard Prepared by: ARC ARC 0 applied for January, 1995 Arms Control Research Center 833 Market Street, Suite 1107, San Francisco, CA 94103 TEL:(415)495 -1786 FAX: (41S)495 -1787 In Association with the BASRC Working Group, comprised of. • San Francisco Redevelopment Agency • • Bay Area Metal Trades Council ■ International Brotherhood of Boilermakers, Iron Ship Builders, Blacksmiths, Forgers, and Helpers, Local 6 ■ International Association of Machinists and Aerospace Workers, Bay Area District Lodge 115 • Shipyard Laborers' Union, Local 886 • The New Bayview Committee a The Hunters Point Citizens' Advisory Committee • Office of Base Transition, U.S. Navy EXECUTIVE SUMMARY In the process of creating transitional jobs for displaced workers, the Bay Area Ship Recycling Complex ( BASRC) will breathe new life into the docks and buildings at or near three closing Navy bases on the shores.of San Francisco Bay. Facilitated by BASRC, the Hunters Point Naval Shipyard, Mare Island Naval Shipyard and Alameda Naval Air Station (or nearby facilities within Alameda County) will co -host a state -of- the -art shipbreaking project that will train and employ 800 -1200 workers for five or possibly more years after closure. As the public partner in a regional public - private partnership, BASRC will play a key role in providing participating companies with a steady supply of obsolete merchant marine and war ships. Private industry will use the piers and berthing areas, dry docks, heavy cranes, warehouses and other large enclosures, rail access, and other valuable facilities at or near the closing bases to take the vessels apart and prepare the salvaged equipment, parts and scrap metals for recycling. In return for the ships and•the facilities, the companies will target new jobs to workers facing unemployment due to base closures, from the current (affecting Alameda and Mare Island) and previous (at Hunters Point) rounds. The ship recycling operations are expected to be profitable, supporting themselves on the income generated from the sale of recyclables. BASRC will also assist industry to comply fully with environmental and worker safety standards. By fostering relationships with research and development institutions in the region, BASRC will be able to promote much needed innovation in this expensive aspect of ship dismantling. Development of cost - effective new techniques for hazardous waste abatement could help to restore the ability of companies throughout the nation to compete against the overseas operators whose cavalier dumping of toxics makes possible their low bids for U.S. merchant marine vessels. To transform BASRC from idea to reality, a business plan is needed. ARC is applying for funds to develop a detailed market study and project design, including • BASRC organizational structure, • an evaluation of plant and facilities at the bases and a plan for appropriate improvements, • ship specifications and conveyance terms, • labor and training requirements, • projections of income from the sale of recyclables, • financing alternatives, • development of legally sustainable set asides, and hiring and contracting goals, • environmental review, and • the design of project alternatives. The Importance of Interim Uses Transitional economic activities represent such a critical step in the conversion process because there is a long time lag between base closure (the date when military activities cease) and base redevelopment, when long term, non - military uses begin operation. This lag is inevitable at most bases because the outcomes of the processes that together comprise conversion (e.g., lay -offs, clean -up, land use planning, and land disposition) are interlocked but their timetables are separately determined. For example, the timing of layoffs is directly tied to the base's closure date, which in turn is set on the basis of national rather than local considerations. From the time that Congress legislates the termination of an installation until it actually closes, lay -offs come in waves, with all civilian jobs eliminated by the date of formal closure. Mare Island and Alameda are scheduled to close in 1996; Hunters Point was virtually closed down 20 years ago. Independent of the layoff schedule and the closure date, the schedule for redeveloping the bases is driven by the cleanup timetable. It is inherently changeable for two reasons: first, the process of remediation of a base expands information about the nature of the contamination problem, often identifying problems more extensive than initially projected; and second, Congress has to reappropriate the funds throughout the 5 -10 years that cleanup requires. The pacing and total amount of this funding ultimately determine how long clean -up will take and what standard of cleanliness will be achieved. Both of these factors constrain redevelopment options, since parcels of base real estate cannot be transferred to new owners for redevelopment until their hazardous wastes have been remediated to levels consistent with the new land uses. Additional delays in the redevelopment process could also result from the inability of local real estate markets to quickly absorb large quantities of "new" land. Multiple base closures in the San Francisco Bay region could release thousands of acres of land and facilities onto the market faster than new uses can be generated to utilize them. This could cause bases to engage in counter - productive competition unless a system for regional coordination and cooperation is established. If the land becomes available at low prices, it could also act as a magnet drawing existing businesses from their current locations with no net gain in employment. BASRC: A Regional Public Private Partnership BASRC is a public- private partnership specifically designed to respond to the Bay Area's urgent need for transitional economic activity related to the three closing industrial Naval bases. As an organization embodying the interests of San Francisco, Vallejo, and Alameda, BASRC will work with private industry over a five -year period in a supportive role. It will knit together four key resources: (1) an experienced industrial work force, heavily impacted by base closures, (2) base acreage and facilities developed by the Navy for maritime and industrial uses, (3) surplus federal ships, ready for scrapping, and (4) disadvantaged business enterprises. page 2 cowl \eve \basrc\revpro3.195January 17, 1995bu95 -1 THE SAN FRANCISCO BAY AREA SHIP RECYCLING COMPLEX: NEW JOBS FROM OLD SHIPS Issue: Forty -five hundred civilian jobs will vanish in 1994 as a result of naval base closures at Alameda and Mare Island By 1996, more than 9,000 jobs that existed in 199. will be gone. The Bay Area Ship Recycling Complex (BASRC) will be able to rapidly create up to 400 transitional jobs at each site for impacted workers within the year. ■■ ■ ■■ Issue: Two decades ago, 3,000 workers at the Hunters Point Naval Shipyard lost their jobs, triggering significant decline in the adjacent neighborhood. Toxic contaminants have not been removed and base re -use has been negligible. The unemployment rate of African American men living in the Hunters Point community currently exceeds 50 %. BASRC will create 400 jobs at Hunters Point and target them to residents of the adjacent neighborhood. Issue: The Navy cannot transfer ownership of contaminated parcels of land on the bases prior to meeting its clean -up obligations, but base closure regulations make no provisions for maintaining the property while environmental remediation is under way. BASRC will help experienced shipbreaking companies use, maintain and upgrade shipyard and warehouse facilities on the bases while San Francisco, Alameda and Vallejo work to implement their long term plans for base reuse. ■ ■ ■ ■ ■ Issue: In selling its surplus ships for scrapping, the U.S. Maritime Administration (MARAD) exports vessels heavily laden with polychlorinated biphenyls and other toxic hydrocarbons, asbestos, lead, and chromates to third world countries where demolition practices are known to poison the environment and endanger worker health and safety. BASRC will help to discontinue dumping of hazardous wastes abroad by ensuring that federally -owned ships are dismantled by U.S. workers in compliance with federal and state environmental and safety laws. The approaching closure of Hunters Point Naval Shipyard, Alameda Naval Air Station, and Mare Island Naval Shipyard has presented the communities ringing the northern half of San Francisco Bay with two critical challenges. The first involves laying the foundation for long term development of the real estate and other property that will become available when the Navy departs. Local governments have stepped up to this challenge by mounting major reuse planning efforts. More urgent, and just as important is the second challenge: to arrange for interim uses that will address the needs of the displaced labor force and encourage maintenance and some modernization of base infrastructure. It is necessary to ensure that these assets are not neglected in the short run as they await dedication to their ultimate uses. page 1 cowl leve\basrc\rcvpro3.195January 17, 1995bu95 -1 BASRC will generate and target up to 1,200 new transitional jobs by creating a system to provide experienced ship scrapping companies with a steady supply of obsolete federal ships at very favorable terms and enabling these companies to utilize suitable facilities the bases.' In return for this assistance, the companies will make a commitment to BASRC to pay union wages and meet specified goals for hiring workers impacted by current base closure and Hunters Point residents impacted earlier. The companies will also be expected to meet goals for contracting with local disadvantaged businesses. In addition, BASRC will assist private industry in achieving the highest environmental standards by linking them with appropriate research and development institutions in the region. Another major purpose of BASRC is the fostering of regional collaboration. BASRC will provide a setting where the needs and resources of San Francisco, Vallejo, and Alameda (and other East Bay jurisdictions that may participate) can be dovetailed with those of other players: e.g., private ship breaking companies, federal agencies responsible for disposing of surplus ships, labor unions, unemployed base workers, disadvantaged business enterprises. BASRC will be the vehicle through which the three cities can jointly direct project policy and administration. ■ BASRC will be the regional body that coordinates the project. It will be responsible for obtaining surplus ships and distributing them fairly among the three base sites. It would also coordinate funding for capital improvements and worker training, ensuring that set asides and hiring goals are met, assure full participation of disadvantaged business enterprises, and arrange for the testing and application of innovative technologies and methods within the scope of the project. BASRC may be structured as a joint powers authority, a public corporation, or some other form, yet to be determined. I BASRC EMPLOYMENT GENERATION: EXAMPLE: AIRCRAFT CARRIER (40,000 TONS) number of employees 80 -100 period of employment- 6 -9 months type of work. abatement (50) cutting and processing (30) other (up to 20) skills profile 8 -10% skilled 45 -50% semi - skilled 35-40% unskilled BASRC PROJECTIONS assumptions: 3 sites, each with • ship capacity per site = 3 ships per site • average occupancy rate = 80 - 85% • average annual turnover = times per ship "slot" • average employees per ship = 80 - 100 Number of employeeslyr = sites x ship capacity x occupancy rate x turnover x employeeslship = 3 x 3 x 80-85% x 1' x 80 -100 979 - 1,300 employees per year page 3 17 1QQ5hn95.1 • Local reuse authorities will lease or license base facilities on an interim basis to private industry. In return, the companies will hire and sub - contract with displaced and disadvantaged workers and businesses directly or indirectly impacted by Navy downsizing. • A commitment will be needed from the Maritime Administration (MARAD, which sells surplus merchant marine ships) and the Defense Reutilization Marketing Service (DRMS, which sells obsolete warships) for a steady supply of appropriate ships on terms that contribute to the project's feasibility. BASRC as a Collaborative Effort In January 1994, ARC /Arms Control Research Center, and the San Francisco Redevelopment Agency began investigating the possibility of obtaining ships from the Maritime Administration ( MARAD) strategic reserve fleet in Susuin Bay for dismantling at Hunters Point. To develop the project, ARC and the San Francisco Redevelopment Agency brought together representatives of environmental regulatory agencies, the Pacific Metal Trades Council (International Brotherhood of Boilermakers, Iron Ship Builders, Blacksmiths, Forgers, and Helpers; International Association of Machinists and Aerospace Workers; and Shipyard Laborers' Union), U.S. Navy Office of Base Transition, the Hunters Point Citizens Advisory Committee and the New Bayyiew Committee (the umbrella organization of Hunters Point community organizations). Based on discussions of this group, the concept expanded to invite Alameda Naval Air Station and Mare Island as well, in order to create a larger, more efficient project that can take advantage of economies of scale and foster regional cooperation. It also began to consider combatant ships marketed by the Defense Reutilization and Marketing Service (DRMS) in addition to MARAD ships. In collaboration with these organizations, ARC developed a preliminary proposal for BASRC, that has now been formally endorsed by the San Francisco Redevelopment Commission, the Vallejo City Council, the East Bay Conversion and Reinvestment Commission, and the Bay Area Defense Conversion Action Team (a project of the Bay Area Economic Forum). The proposal is currently being reviewed by the Alameda Base Reuse Advisory Group for recommendations to the Alameda Local Reuse Authority. A number of companies in the ship breaking industry have also expressed strong interest in BASRC, including Sims -LMC, Schnitzer Steel, Astoria Metals, San Francisco Dry Dock, and Pegasus Export Managers. This proposal incorporates the ideas and suggestions expressed in those many discussions and follow -up research. It has been developed as a working document: to communicate the concept, to share both information and questions that ARC has formulated, to stimulate discussion and ideas to improve the concept, to gather together those who want to assist in its development, and to serve as the basis for obtaining funding for a BASRC detailed business plan. page 4 coml \evc\basrc\revpro3.195January 17, 1995bu95 -1 Applying Base Workers' Skills to New Tasks: The Ship Recycling Process In general terms, ship recycling involves five overlapping operations, each with its own capacity to create new employment and /or small business opportunities. 1. Removal of equipment, parts, fittings, etc. - The first step of the recycling process involves salvaging parts with resale value. The ships have been stripped of equipment and instrumentation to varying degrees prior to auction, especially the shops and communications centers. Even so, they typically contain a wide (if random) selection of equipment. Surplus vessels typically come with equipment ranging from diesel generators and drill presses to refrigerators and toasters. In addition to equipment, ships contain smaller parts and hardware that have more value in their fabricated form than as scrap metal. The ability of the shipbreaking company to preserve this added value, however, depends on its ability to store and market such items for which there is specialized and erratic demand, or to spin off small businesses that take advantage of the combined volume of recyclables created at the three sites. 2. Abatement of hazardous wastes - Federal ships are conveyed with large amounts of toxics (combatant ships from DRMS in general contain higher levels than merchant marine vessels from MARAD). For instance, polychlorinated biphenyls (PCBs) were widely used in closed applications such as capacitors, transformers, and hydraulic systems, and in open -end ones such as cable insulation, gaskets and adhesives. These must be safely removed before the ships can be reduced to component parts and materials. Other hazardous wastes include friable asbestos, lead paint, bilge water contaminated with zinc and lead chromate, petroleum hydrocarbons, and other toxic fluids. When ship scrapping occurs in non- industrialized countries - primarily India, Pakistan, Bangladesh, and China - these hazardous wastes are not prevented from contaminating the environment nor from endangering the workers involved. A National Geographic film, Where Ships Go to Die, portrays the problems in vivid detail.' The technique in India and China has consisted of running the old ships onto the beach where workers reduce them to scrap for bare subsistence pay. The toxic wastes.are released directly onto the beach and into the ocean; workers do not even have masks to protect them from massive amounts of air -borne asbestos. Indian shipyards, where this work takes place are financed by Japanese capital. Lacking the foreign currency needed to purchase obsolete ships, China has sought foreign aid to expand its ship scrapping industry. In contrast, companies dismantling ships within the U.S. must comply with federal and state regulations that ensure that these hazardous wastes are not released into the environment and that workers are protected from unsafe contact. When ship scrapping takes place in U.S. shipyards, on -board abatement tasks account for a significant proportion (on the order of of the labor associated with ship breaking. Some displaced workers already possess skills such as asbestos abatement; the Mare Island work force, for example, includes about 225 workers certified in asbestos abatement. Others will need training to carry out these tasks, especially in the ship breaking context. Skills gained will be highly transferrable to other venues in the growing sector of hazardous waste abatement. page 5 As part of its commitment to extensive participation by local small businesses - especially those owned by minorities and women - BASRC will work with the shipbreaking companies to contract out some of the work of abating and transporting hazardous wastes. 3. Cutting - Once toxics and hazardous materials have been removed from the ship, cutters using acetylene torches and hydraulic shears cut the hulls into large blocks that heavy cranes transfer to large buildings for further processing. Cutting skills are quickly acquired, even by workers with modest education and low skill levels. According to one experienced person in the industry, an estimated 80 hours or so of training would be primarily devoted to teaching safety procedures. The critical need during the cutting phase is for good supervision, because the cutting work takes place in close quarters with a high risk of fire, structural collapse, and employee falls. In addition, other trades will work alongside the welders and cutters: riggers to prepare the blocks for removal from the vessel, carpenters to build scaffolds and railings, crane and other heavy equipment operators, truck drivers, etc. More than half of the displaced workers are likely to find their previous shipyard and air station experience transferrable to BASRC operations with only minimal training. 4. Processing, Materials for Scrap - Relatively unskilled workers continue the shipbreaking process by disassembling the large blocks, and cleaning and sorting the resulting scrap. Different kinds of ferrous steel (distinguished primarily by their varying zinc content), stainless steel, aluminum, and red metals (copper, brass, and bronze) are separated and cut to marketable sizes. In general, the price for scrap steel increases as it is reduced to smaller (5' x 2') pieces, although the export market often will absorb larger, less processed pieces. To a large degree, the differences in value between ships of a similar age and size are related to the relative amounts of non - ferrous materials that are available. On average, DRMS ships contain more of these valuable non - ferrous materials and their scrap value, therefore, tends to be higher. 5. Marketing Parts and Materials - One of the major challenges to shipbreaking companies is the development of markets for ship parts in their fabricated form rather than as stock for resmelting or rerolling because the price earned per ton or pound is so much greater. The significant "value added" embodied in machinery, fittings, and fixtures can be preserved to the extent that these items can be recycled intact rather than reduced to raw metal. In interviews, ship scrappers have suggested abroad range of creative ideas: huge generators mounted on barges as floating power stations, delivering engines and boilers to ships experiencing breakdowns at sea so they can navigate their way to shore for repairs, and memorabilia, such as brass plaques, fixtures, and fittings for boaters, interior decorators, and tourists. Maintaining the full inventory that would be necessary to serve the specialized and /or erratic demand for these items, however, depends on predictable resupply and inexpensive storage. Current federal auction protocols have not allowed ship breaking companies individually or in regional clusters to anticipate with any certainty that they will be able to obtain the threshold volume of ships needed to support a cost- effective, aggressive marketing effort for ship page 6 cowl \cve \basrc\revpro3.195January 17, 1995bu95 -1 recyclables. BASRC, by concentrating a high volume of ship breaking in a compact geographic area can break through this uncertainty and spin off new businesses that offer opportunities for base workers experienced in procurement, inventory control, marketing, and other white collar occupations. Supply of Ships BASRC will obtain ships for the project from two federal government sources: MARAD and DRMS. Determining the specifications of a "package" of ships (such as their classification, size, condition, types of hazardous wastes, non - ferrous metals and equipment they contain) and the terms for their conveyance from the federal government will be key to the project's financial success. Because MARAD and DRMS surplus ships fall into many categories, it is not useful to project the number of ships that the project will require to meet its objectives. Together, the three sites are expected to process nine to twelve ships simultaneously over the life of the project. Depending on size and complexity, each ship will require six to nine months of work. MARAD Ships - MARAD, an arm of the U.S. Department of Transportation, has been disposing of merchant marine ships in third world countries since the 1970's, when passage of the White Lung Act, the Clean Air Act, and the Clean Water Act increased costs for domestic scrappers, with a corresponding decrease in the prices they could pay. The ships that MARAD sells are in general smaller, contain lesser quantities of metals with high scrap value (steel with a high zinc content, stainless steel, aluminum, copper and other red metals), and they also require less abatement of toxics. Sale revenues that MARAD has realized reflect the "savings" associated with dumping of toxics and very high worker mortality in the "friendly foreign countries" (primarily India and China) where the scrapping occurs. The following figures provide some sense of the MARAD market in 1993 and 1994: ■ six frigates, 2,500 - 3,000 tons each, for $225 per ton; II one frigate , almost 10,000 tons, for about $190 per ton; • thirty victory ships, 4,000 - 4,500 tons each, for prices ranging from about $60 to $85 per ton; ■ one victory ship, almost 2,000 tons, for about $6 per ton. MARAD's National Defense Reserve Fleet, a constantly replenishing source of ships, contains (as of 7/94) 305 vessels. About 1/3 of these ships are in the Ready Reserve Fleet; they are maintained at levels that allow them to be activated on 5, 10, or 20 days notice for military supply missions. The remaining 209 non -ready reserve ships (including 61 anchored in Suisan Bay) are the source of ships that MARAD auctions for scrap. Forty -seven of the non -ready reserve ships, including thirteen from Suisan Bay, have been scheduled for sale within the year, but the auction is on hold because the U.S. Environmental Protection Agency has raised questions about toxic dumping. Thereafter, MARAD expects to sell about a dozen a year for the next three years, and subsequently sell three per year. In 1991, the General Accounting Office recommended that the non -ready reserve fleet be phased out at an accelerated rate based on Gulf War experience. During that conflict, the page 7 military used 359 ships for sealift of equipment and supplies. To supplement ships from the Ready Reserve Fleet, the Defense Department chartered an additional 180 foreign and 32 U.S. commercial ships rather than activate a single, ship in the non -ready reserve. BASRC's need for ships is consistent with an accelerated MARAD scrapping schedule. Dismantling these ships in the context of base conversion opens up opportunities for creative ways to offset revenue losses to MARAD that could result from requirements for domestic scrapping. DRMS Ships - Unlike MARAD, DRMS entertains bids solely from domestic scrapping companies for reasons related to national defense. This Defense Department agency limits sales of obsolete warships to scrappers operating in the U.S. who demonstrate some ability to comply with environmental and worker safety standards. Within the industry, there is some suspicion that low bidders at the DRMS auctions are less than rigorous in their compliance. Although it is not reassuring that some of the companies transport crews of immigrant workers across the country to work 12 -hour days cutting the ships, DRMS procedures do require an environmental compliance plan to be submitted as part of the bid package. • DRMS ships are highly varied in size and value. sold last year for $15 per ton, the 535 ton attack and the Newport News, a 14,000 ton cruiser, for 1993 and 1994 include: • five minesweepers, 600 - 800 tons each, at ton; • ten destroyers, 3,400 - 6,100 tons each, at prices ranging from $33 to $60 per ton; • two other aircraft carriers, about 30,000 tons each, selling for less than $7 per ton. ARC has been monitoring turnover in the Navy fleet for many years and projects on the order of 100 vessels will be surplussed by the end of the century, including • submarines (both non - nuclear and nuclear, in the 3,000 and 8,000 ton range), • nuclear cruisers (about 10,000 tons each), • aircraft carriers (@ 45,000 to 60,000 tons), • destroyers (@ 3,500 tons). The 50,000 ton Coral Sea aircraft carrier ship Sagamore for $26 per ton (in 1994), $4 per ton (also last year). Other sales in prices ranging from about $50 to $80 per The Ship Scrapping Industry For the past thirty years, obsolete combatant ships sold by DRMS represent the only ships to be dismantled domestically. Commercial ships from all over the world, including the U.S., travel for cutting to the poorest third world countries - primarily China and India - whose competitiveness is based on a lethal combination of bare subsistence wage rates, dangerous working conditions, and environmental degradation. The men leave their wives behind anc4 once having reached Gadani [Pakistan], live on the beach...Workers' quarters, company offices, all built from driftwood and scraps from the sea. An upturned lifeboat serves as a roof for one enterprising worker's home, but for most of the workers shelter consists of tar paper shacks, with as many as six men sleeping shoulder -to- shoulder. There are open sewers. It is 40 miles to the nearest page 8 coml \eve \basrc\revpro3.1957anuary 17, 1995bu95 -1 doctor. On the day I arrived green mourning flags flew from four of the ramshackle huts. Nobody would tell me how many workers had died but I learned that the death fee of 15,000 rupees ($710) promised the families back home is rarely paid by the shipbreaking companies. It is more cost - effective to scare any stray relatives away. Nearly all unskilled, the workers are recruited from scores of poor and desolate villages along the Afghan frontier by local tribal chieftains - who get a finder's fee. The workers' average age is 25. Their beach bosses often don't know their names. Some stay for a season, others for ten years, returning home to visit every few years and sending their pay back to wives and children. Some die at Gadani, fallen from the ships they work on or crushed by sheets of steel. Day begins at 7 A.M., and ends at 7 P.M. There are no holidays and the work is seven days a week2 U.S. companies cannot compete financially with such operations; The only ships scrapped in the U.S. are those disposed. of by DRMS. However, there is interest - especially by companies in the scrap metal industry - in increasing the volume of domestic ship scrapping. Working through their trade organization (the Institute of Scrap Recycling Industries - ISRI), in 1991 they unsuccessfully advocated the modification of MARAD auction procedures to enable U.S. companies to compete. A number of companies active locally, with both current and historic experience in ship breaking, have expressed great interest in BASRC. Sims -LMC Recyclers in Richmond, Schnitzer Steel in Oakland, Service Engineering in San Francisco, and Astoria Metals (which recently signed an agreement to lease Dry Dock #4 at Hunters Point for ship cutting), and Pegasus Export Management, a minority -owned firm in Oakland that has connections with overseas shipbreaking have all expressed positive interest in BASRC. Market for Recycled Materials U.S. demand for steel is being met to a significant degree by electric arc furnaces, that contributed almost 40 %' of the nation's total steel production for the first eight months of 1993. These furnaces are used in decentralized mini- mills, and rely exclusively on scrap as the source of their ferrous materials (as opposed to the larger scale blast oxygen and other blast furnaces that depend on a combination of ores and scrap). Electric arc furnaces consumed almost 3/3 of domestic scrap steel during this same reporting period. Electric arc furnaces have also allowed mini -mills to spring up in countries far removed from iron mines, and have stimulated a thriving Pacific Rim market for Bay Area scrap. About 9% of the nation's export of iron and steel scrap by value (more than $77 million worth) was shipped from the San Francisco Customs District during this reporting period, making this area the third largest scrap export center in the U.S., surpassed only by New York and Los Angeles. The prices for ferrous scrap are currently at an all -time high, on the order of $150 per ton. The market is volatile, however, and BASRC market projections will rely on more 2 "Great Ships go to the Boneyard on a Lonely Beach in Pakistan ", Mary Anne Weaver, Smithsonian June 1990 (XXI:3), page 38. Page 9 conservative figures in the $75 - $ 100 range. The Bay Area and Ship Recycling The San Francisco Bay Area is the ideal location for a domestic ship recycling demonstration project. All of the necessary factors of production are in place for rapid start-up: Facilities - Hunters Point, Alameda and Mare Island individually and in combination offer developed marine and industrial plants exceptionally well suited to the needs of ship breaking activities: large amounts of pier space, dry docks, very large warehouses with high clearance, environmentally controlled enclosures, rail access, heavy cranes, pollution control systems, etc. are available in various combinations. Two East Bay companies (Sims -LMC and Schnitzer Steel) have extensive scrap yards and facilities that could also be incorporated. In addition, the proximity of the three locations to one another also offers possibilities for an integrated operation that carries out specific phases of the ship breaking process at each of the sites rather than setting up three complete operations. Detailed analysis is needed to design the optimum configuration for the project. , Experienced labor force - Shipbreaking is an especially good transition industry for the bases because it is a labor intensive activity that is not very exacting in the profile of employee skills it requires. According to one experienced manager, the field operations require 35-40% unskilled labor, 45 -50% semi - skilled torch cutters, and 8 -10% skilled machine operators. The key to productivity and safety is good supervision. The occupational histories of Alameda and Mare Island workers facing displacement and those already impacted in the Hunters Point community mesh easily with the labor requirements of a shipbreaking operation. About half of the 10,000 civilians working at Alameda and Mare Island are in occupations that are compatible with shipbreaking. Of these, about 1,800 workers appear to be in the metal trades. The Hunters Point area similarly includes many residents whose occupational backgrounds will enable them to contribute to BASRC. The International Brotherhood of Boilermakers, Iron Ship Builders, Blacksmiths, Forgers and Helpers have identified 147 members living in zip codes 94124 and 94134, which overlap Hunters Point. In addition, Hunters Point will benefit greatly from the shipbreaking industry's high demand for unskilled workers. A regional overview based on the 1990 Population Census suggests that workers in the region who currently are in relevant occupations represent a racially and ethnically diverse group. In the counties of San Francisco, Alameda, and Solano, the 6,600 workers categorized in the welding/cutting, sheet metal, structural metal, and construction trades are 55% White, 25% Latino, 10% African American, and 10% Asian. BASRC will also offer employment opportunities to workers with both low educational and skill levels and traditional trade experience - those likely to encounter severe re- employment problems in the rapidly de- industrializing Bay Area economy. More than half the employees at both Alameda and Mare Island have no formal schooling beyond high school. past 10 cowl \evc \basrc\rcvpro3.195January 17, 1995bu95 -1 Difficulties also lie ahead for older workers. About half the workers at both Alameda and Mare Island are older than 45, and with more than 15 years of federal service (at Mare Island, half have more than 18 years). While this suggests that many workers will retire when the bases close, it also implies that many who need work will encounter trouble finding it, particularly in the shipyard settings where they are accustomed to working. About half the workers are in their forties; BASRC, as a transitional project, will present many of these workers with opportunities to remain in familiar industrial settings in the twilight years of their careers, even if the precise nature of their work changes. Small Business Potential - BASRC will encourage the participation of existing and new small businesses in such areas as toxics abatement and transport, marketing of salvaged ship equipment and parts, metals recycling, and general contracting. Many of these spin -off businesses have modest capitalization requirements and BASRC will target these opportunities to existing and start -up disadvantaged business enterprises' by providing access to affordable capital and technical assistance. BASRC also could anchor a cluster of secondary manufacturing businesses in appropriately zoned areas on one or more of the bases. There is much interest within the Bay Area in developing base reuses that serve as models of environmental and social sustainability, which would include a manufacturing sector using recycled materials. Potential for Environmental and Technical Innovation - Traditionally ship breaking has been a low tech industry. The narrow profit margins, volatile scrap metals markets and uncertainties of ship supply have discouraged investment in innovations and experimentation with applications of new technologies. An unfortunate repercussion has been the exporting of the U.S. shipbreaking industry to India, Bangladesh, Pakistan, and China rather than efficient adaptation to modern standards of environmental protection and worker safety. BASRC creates exciting new opportunities for the industry to work with Bay Area scientific research and development institutions to explore innovative solutions to some of the problems that have eroded the competitiveness of the industry, especially in the costly area of hazardous waste abatement. Other areas for exploration include new cutting techniques and possibilities for creating a higher value stream of recycled products and materials. Additional Benefits Support for Other Shipyard Activities - Although the most dramatic experience of Navy downsizing in the San Francisco Bay Area has been base closures, elsewhere on the West Coast and nationally there have been large impacts on shipping support services. Nineteen ninety -four has been a year of financial crisis for the U.S. ship building and repair industries, the unfortunate consequence of their dependency on Navy contracts. Some affected companies are looking to the related activity of ship breaking as a means to stay afloat. BASRC is conceptualized as interim economic development to benefit base workers and facilities, yet it may well provide transitional opportunities for ship building and repair companies as well during this period of adjustment to Navy downsizing. International Model of Environmentally Sustainable Shipbreaking - One tragic aspect of the export of the U.S. ship breaking industry has been the nation's loss of jobs; another is that the page 11 U.S. government bears a share of responsibility for increasing environmental pollution and human mortality rates in the poorest countries of the world. The international backlog of commercial ships requiring demolition threatens to aggravate these problems. The current world ship scrapping capacity is about 12 million tons per year; economists in the shipping industry calculate the need to scrap 20 million tons per year. The pent up demand for ship breaking creates an urgent need for techniques and technologies that are both cost - effective, safe, and environmentally benign. The countries that will be performing the work because they are poor should not be condemned to suffering irreversible damage to their natural and human resources. The Bay Area, with its high level of interest in sustainable industries is the ideal setting in which to develop a model of responsible ship breaking that can be shared with the rest of the world. Developing a BASRC Business Plan A detailed business plan is needed very soon to design BASRC and provide full environmental review. In addition to standard financial analysis and projections, the business plan will develop plans for the following specific features: ■ The structure of the BASRC organization - BASRC will need to provide a mechanism for regional cooperation that involves participating local governments. In addition, the organization needs to be structured so that it can respond responsibly and flexibly to industry realities. The business plan will evaluate several options in the process of recommending a governing board that ensures financially viable operations, full compliance with environmental and worker safety regulations, regional equity, and community oversight. ■ Model procedures to ensure efficient and fair conveyance of ships and other public resources among the three sites - The key to regional cooperation will be a system for distributing the ships fairly. The business plan will analyze whether the three sites should be involved in a single integrated operation or whether each site should replicate the entire process. ■ Preliminary negotiation with MARAD and DRMS of the terms for ship disposition - The financial feasibility of BASRC will depend on the cost and the mix of MARAD and DRMS ships, but additional cost analysis and negotiations are needed to determine the range of terms that are consistent with financial feasibility. ■ A plan for supporting the project's capital and operating needs - The plan will identify specific facilities and locations on the bases to be used for BASRC operations, provide an analysis of the infrastructure needed to support them, and develop procedures to prevent environmental degradation. It will need to accommodate resource areas, including habitat restoration and wildlife areas, and assess the environmental status of selected facilities to ensure that BASRC operations do not impede cleanup of the bases. a Development and monitoring of procedures that ensure priorities for displaced workers, minority and women employment, and small business development - Legally defensible page 12 cowl \eve \basrc\revpro3.1957aauary 17, 1995bu95 -1 hiring and contracting goals and set - asides, ensuring full community participation in BASRC need to be designed to maximize protection for those most impacted by base closure. • Development of model agreements, such as leases, joint powers agreements, and ship conveyance documents, to be used in the implementation of BASRC; • Compliance with all relevant environmental, Iand use, and other regulatory requirements need to be factored into all financial projections. Building Collaboration in the Business Plan To be successful, BASRC will need to reconcile the needs of disparate sectors: the three participating cities, private industry, labor, unemployed base workers, environmentalists, and regulatory bodies are the most obvious. To ensure that the business plan recognizes this full range of interests, ARC is committed to setting up a technical advisory committee to assist in its development. This committee, comprised of representatives from the groups mentioned above will have two main responsibilities: (1) recommending consultants to work with ARC on preparation of the plan; and (2) providing an on -going reality check on trade -offs between interests in light of concrete information developed by the business plan. ARC will seek funding for business plan preparation from a variety of sources, including the Department of Defense, the Department of Commerce (including State matching funds) and private foundations. gage 13 Business Plan Projected Budget: Summary Organizational Structure of BASRC development of alternative structures relationship with reuse authorities drafting of agreements Financial Analysis terms of ship acquisition, distribution facility rentals capital costs pro formas cost - benefit analysis Ship Acquisition and Disposition negotiation of agreements with DRMS and MARAD terms of distribution to participating companies Market Analysis absorption of scrap metals regional industry profile new markets Engineering Analysis (3 sites) existing infrastructure BASRC site plans improvements cost estimates Environmental Analysis (3 sites) site assessments permitting status industry profile Land Use Analysis (3 sites) site assessments permit analysis Work Force and Job Development skills inventory and training assessment legal analysis and drafting of preferences Small Business Development outreach and inventory legal analysis and drafting of set asides Pollution Prevention Study $20,000 35,000 25,000 20,000 100,000 150,000 20,000 25,000 10,000 20,000 Estimate of Overhead (to be detailed) 75,000 TOTAL $500,000 page 14 cowl \eve \basrc\revpro3.195January 17, 1995bu95 -1 CORRESPONDENCE Alameda Reuse and Redevelopment Authority Alameda Naval Air Station Postal Directory, Bldg. 90 Alameda, California 94501 -5012 510- 263 -2370 FAX 510 - 521 -3764 March 17, 1995 California Department of Transportation 111 Grand Street Oakland, California 94623 Attn: Mr. Herb Okubo Chief - Local Streets and Roads RE: Environmental Enhancement Mitigation Grant (04 -EEM 92 -145) Request for Extension Dear Mr. Okubo: The Alameda Reuse and Redevelopment Authority request a one year, 12 month extension from June 5, 1995 to June 5, 1996 to the City of Alameda's Environmental Enhancement Mitigation Grant (04 -EEM 92 -145) for the purchase of the Southern Pacific (S.P.) right -of -way for park purposes. The City of Alameda was awarded an Environmental Enhancement Mitigation (EEM) Grant in 1992. The grant was for $400,000, and is to be used to assist in the City's purchase of the Southern Pacific Railroad Company railroad right -of -way east of Main Street in Alameda. The railroad previously served the Alameda Naval Air Station (NAS) but is no longer needed. However, S.P. cannot sell the property to the City until the Naval Air Station releases S.P. from their agreements to provide service. The recent base closure action caused NAS Alameda to temporarily postpone the decision to release the Southern Pacific Railroad from their contractual agreement. Because of the base closure action, the Department of Transportation granted the City a one year extension on the EEM grant (to June 5, 1995). While the reuse planning process for NAS Alameda is underway, the final reuse plan will not be completed and adopted until December 1995. The reuse planning process was delayed to allow for the formation of the Alameda Reuse and Redevelopment Agency, the "Local Reuse Authority" (LRA), as required by federal regulations. The Alameda Reuse and Redevelopment Authority (ARRA) was formed through a Joint Powers Agreement as a regional agency charged with the responsibility of reuse and redevelopment of NAS Alameda. The Reuse Authority is made up of the five council members of the Alameda City Council, the Mayor of Oakland - the Honorable Elihu Harris, the Mayor of San Leandro - the Honorable Ellen Corbett, Supervisor of Alameda County District 3, the Honorable Wilma Chan, and our Congressman from the 9th Congressional District, the Honorable Ronald Dellums. At its regular meeting of Wednesday, March 1, 1995, the ARRA unanimously passed a Alameda Reuse and Redevelopment Authority March 3, 1995 • Page 2 motion requesting the California Department of Transportation grant an extension to the City of Alameda's EEM grant (04 -EEM 92 -145). The base closure at NAS Alameda and its successful reuse is both a critical regional and local concern. The purchase and improvements to the S.P. right -of -way is an important piece of our redevelopment efforts. Purchase of the S.P. right of way for park enhancement will not only improve the immediate neighborhood but will also make marketing the redevelopment of NAS Alameda more viable and successful. Because of the extraordinary and extenuating circumstances related to the Federal Base Realignment and Closure (BRAG) law and the critical nature of the reuse planning efforts for NAS Alameda, we request that an additional extension be granted for the City of Alameda's EEM grant. If you have any questions or need additional information as background to this request, please contact the City of Alameda staff (Dick Rudloff, Public Works Coordinator, 510. 748- 4552) or our office (David Paul Tuttle, Reuse Planner, 510. 263- 2870). Sincerely, cc: d Louk erim Executive Director The Honorable Pete Wilson, Governor of California The Honorable Ronald Dellums, Congressman 9th Congressional District The Honorable Barbara Lee, Member of the Assembly ARRA Members Joe Browne, District Director, Cal Trans Derek J. Pool, Local Assistance Engineer, Cal Trans Mr. Jerry B. Epstein, Chairman, California Transportation Commission Mr. Robert I. Remen, Executive Director, California Transportation Commission Mr. James van Loben Sels, Director, California Department of Transportation William C. Norton, Alameda City Manger Robert Warnick, Alameda Public Works Director Mr. Carl Anthony, Chairman, EBCRC Ben Williams, Deputy Director, State Office of Planning & Research Mr. D.R. Thomas, Ass't Engineer, Southern Pacific Transportation Company STATE OF CA!-IFOANA - BUSINESS, TRANSPORTATION AND HOUSING AGENCY PETE WILSON, Governer DEPARTMENT OF TRANSPORTATION BOX 23660 a ` AND, CA 94623 -0660 286 -4444 April 13, 1995 Mr. Robert Warnick Director of Public Works City of Alameda 2263 Santa Clara Ave. Alameda, Ca. 94501 Attention: Dick Rudloff Dear Mr. Warnick: 04- Ala -0 -Ala EEM 92 -145 Main St. Corridor Linear Park This letter is in response to your letter of March 17, 1995 in which you requested a second time extension for the above referenced project. I regret to infoim you that your request has been denied. Your project is a Cycle 2 EEM project, and the termination date in the agreement for all Cycle 2 projects is June 30, 1995. This fact is stated in Section 2660 of the State Budget Act. After June 30, 1995, the remaining EEM funds will revert back in to the EEM program account. If the City of Alameda wishes to proceed with the project (using EEM funds) after the termination of Local Entity -State Agreement No. 04- 92 -19, the City must re -apply for EEM funding. If you have any questions, please call me at (510) 286 -5743. Sincerely, JOE BROWNE District Director / erek J. Pool Local Assistance Engineer MEMORANDUM NDUM From: David Haase To: Distribution DEPARTMENT OF DEFENSE BAY AREA BASE TRANSITION OFFICE Subject: BTC TRAINING CONFERENCE 410 Palm Avenue, Building One Treasure Island San Francisco, CA 94130 Telephone: (415) 395 -3919 FAX: (415) 395 -3990 1 JUNE 95 1. CDR Elkins and I will be attending the BTC Training Conference in Washington D.C. from June 2 through June 18. At the conference, we will learn more about the final rules, economic development conveyances and the planned issuance of a community guidebook. We will provide you with an update upon our return. 2. We will have staff available during this period to handle any emergent issues and communications. We will check in on a daily basis in order to reply to any requests. Please excuse any inconvenience. Copy to: Alameda Reuse and Redevelopment Authority Oakland Base Reuse Authority San Francisco Redevelopment Authority Bay Area Defense Conversion Action Team