Contract of Sale of Lanscaping Business

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					         California Integrated Waste Management Board
                                      Board Meeting
                                     January 17, 2007
                                   AGENDA ITEM 14
Consideration Of The Recycling Market Development Revolving Loan Program Application For
Grover Landscape Services, Inc. (Recycling Market Development Revolving Loan Subaccount,
FY 2006/07)
       This agenda item presents for consideration the Grover Landscape Services, Inc.
       application to the Recycling Market Development Revolving Loan Program (RMDZ
       Loan). Grover Landscape Services, Inc. is requesting a $1,000,000 loan for the purchase
       of real estate. The Company manufactures compost, mulches and various soil mixes and
       blends from green waste and wood waste. It projects to increase diversion of green and
       wood waste by 50,000 tons annually and to hire ten more employees. The project is in
       Vernalis, CA within the Stanislaus County RMDZ.

        In June 1996, the Board approved a loan to Grover Landscaping, Inc. in the amount
          of $400,258. Funds were used to purchase machinery and equipment and fund
          working capital for the expansion of its composting facility. Grover Lanscaping, Inc.
          later changed its name to Grover Landscape Services, Inc. The loan has been repaid
          in full.
        In June 1999, the Board approved a loan to Grover Landscape Services, Inc. in the
          amount of $1,000,000. Funds were used to purchase machinery and equipment,
          leasehold improvements, furniture and fixtures, and to refinance onerous debt. The
          loan has been repaid in full.
        In September 2005, the Board approved a loan to Grover Landscape Services, Inc. in
          the amount of $2,000,000. Funds were for the purchase of 3909 Gaffery Road in
          Vernalis (subject of this loan request), capital improvements and equipment. At the
          time, The company was unable to consummate the real estate purchase and
          subsequently, the loan was reduced to $1,548,750 and used only for capital
          improvements and the purchase of equipment. Outstanding balance as of 11/30/06 is
          $1,495,137.62. The loan is being paid as agreed. Subject property is now again
          available for sale and the company has requested a RMDZ loan to assist in the

       1. Approve the RMDZ Loan application for Grover Landscape Services, Inc.
       2. Approve with revisions the RMDZ Loan application for Grover Landscape Services, Inc.
       3. Take no action and provide staff with further direction.

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Board Meeting                                                                           Agenda Item-14
January 17, 2007

          Staff recommends that the Board approve Option No.1 and adopt Resolution Number
          2007-15 to approve a RMDZ Loan to Grover Landscape Services, Inc. in the amount of

V.        ANALYSIS
          A. Key Issues and Findings
      Company Background
       Incorporated in 1976, Grover Landscaping Services, Inc. (Grover) was founded by the
        current owner, Mark Grover, in 1970 as a small lawn business, primarily mowing and
        edging residences on a monthly contract basis.
       Over the years, the scope of business has grown tremendously.
       Headquartered in Modesto, CA, Grover is now a comprehensive landscape service
        company with five divisions (Landscape Contracting, Maintenance, Tree Service,
        Wholesale Nursery and Environmental Products).
       In 1987, Grover began a pilot program to recycle by-products from its other divisions.
       Grover holds permits for three composting facilities, two of which are in Stanislaus
        County and one in Yolo County.
       Presently, only one of the three facilities (subject site) is used for composting. The others
        are chip and grind operations.
       Subject site is permitted for an active composting capacity of 200,000 cubic yard. Grover
        currently has reached about half of that allowed capacity.
       Grover was diverting about 7,000 tons of green waste and wood waste annually from
        California landfills in 1996 when they received the first RMDZ loan from the Board.
       In 2005, Grover diverted more than 250,000 tons of green waste and wood waste from
        California landfills and has 175 employees.
         Grover has requested a RMDZ loan in the amount of $1,000,000 to assist in the purchase
          of a 67-acre site that the Company currently leases and operates on. Acquiring this
          property will insure that Grover has site stability and justify capital expenditures that
          include concrete paving of five acres and the construction of an on-site truck shop.
          Screening equipment will be placed on the paved area and thus free up valuable
          composting space. These improvements will allow greater efficiencies of Grover’s
          composting operation, meet growing customer demand and thereby increase the diversion
          of waste materials from California landfills.
         Total purchase price of the real estate is $2,000,000. The RMDZ Loan will finance 50%
          of the project and the balance will be financed by the Grover and its and owners, Mark
          and Lorraine Grover.
         It is noted that concurrent to this project, Grover is also in the process of purchasing a
          50-acre adjoining site on Gaffery Road (to be financed by the seller) which will further
          expand its operations and increase waste diversion.
         This project will assist in the implementation of the Board’s 2005 Market Assessment
          Action Plan by providing an opportunity to a business that uses a Board priority material
          as feedstock.

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Board Meeting                                                                          Agenda Item-14
January 17, 2007

          Project Eligibility
            Grover qualifies as a recycling project.
            The project takes post consumer or secondary material (green waste and wood waste)
             and produces a value-added finished product (compost, mulches, soil mixes and
          Compost, natural and colored mulches, soil mixes and blends.
          Grover produces under the label WonderGrow.
          Feedstock consists of green waste, construction wood and used pallets, roof tear-offs,
            logs, stumps, sod, wood chips and dirt.
          Feedstock is supplied by Grover’s other divisions as well as landscape contractors
            and companies, the City and County of Sacramento, Stanislaus and San Joaquin
            Counties as well as various cities from the San Francisco Bay Area via Waste
            Management Company.
         Value-Adding process
          To produce the compost. green waste is ground, screened, and then placed in open
          Mulches are recycled from construction wood, pallets, logs and tree chips that are
            ground, screened and colored, if necessary.
          Farmers and dairies.
          Agriculture, landscape and hydroseed companies.
          Wholesale bark and soil amendment yards.
          Horticultural bagging companies.
          Various cities in Northern California as well as CalTrans.

    Interdivisional Reviews
            Staff from the Board’s Permitting and Enforcement Division (P&E) has reviewed
             the applicant’s permit requirements and is of the opinion that subject project does not
             require any permit revision or new permit at this time.
            Staff from Diversion, Planning, and Local Assistance Division (DPLA) is in the
             process of reviewing the project and determining if the material to be processed by
             Grover is normally disposed of in a landfill.
            Grover has certified that the project complies with all local and federal laws,
             regulations, requirements and rules, including CEQA.

          Loan Committee
            The Loan Committee will meet on January 4, 2007 to consider staff’s analysis of
             Grover Landscape Services, Inc.’s loan application, and its ability to repay and
             collateralize the loan.
            The results will be presented at the January 9, 2007 Sustainability and Market
             Development Committee.

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Board Meeting                                                                       Agenda Item-14
January 17, 2007

         B. Environmental Issues
          Composting site at 3909 Gaffery Road, Vernalis, CA is located within a 315-acre
            parcel all designated “General Agricultural”.
          According to Applicant, there is no residential community within a four to five mile
         C. Program/Long Term Impacts
          Based on the information in the jurisdiction’s Source Reduction And Recycling
            Element (SRRE), green waste and wood waste that will be used as feedstock for this
            project is normally disposed of in landfills.
          Grover is projected to increase its processing of green waste and wood waste from the
            current 250,000 tons per year to 300,000 tons per year and will contribute to the
            diversion of that material from the waste stream, thereby assisting the local
            jurisdiction’s compliance with the disposal reduction mandate under the Integrated
            Waste Management Act, Assembly Bill (AB 939).
         D. Stakeholder Impacts
          The Stanislaus County recycling coordinator, zone administrator and the local
            jurisdiction are the key stakeholders for this project.
         E. Fiscal Impacts
          Public Resources Code, Section 42023.1, provides the authority that funds this item.
          This item is funded by the Recycling Market Development Loan Program
         F. Legal Issues
         G. Environmental Justice
             The U.S. Census Bureau 2000 depicts for Census Tract No. 33, Stanislaus
             County, California the following:

                  Demographics
                     58.2%               Hispanic and Latino Non-White
                     36.9%               White
                      1.3%               American Indian & Alaska Native
                      1.0%               Black & African American
                      1.0%               Asian
                      0.3%               Pacific Islander
                      1.3%               Other

                  Economic Profile
                   $36,250        Median household income
                   $12,425        Per capita income
                     28.3%        Persons living below poverty

                                                                                           Page 14-4
Board Meeting                                                                         Agenda Item-14
January 17, 2007

             Project Site Information
              Site is 67 acres located at 3909 Gaffery Road, Vernalis, CA 95363.
              It is a subdivision of a 315-acre agricultural site owned by Sun-Dry
              The site is zoned “A-2-40”- General Agriculture.
              This area is predominantly agricultural. The nearest residential
                community is four to five miles away.

         H. 2001 Strategic Plan
                  N/A


         1. Fund          2. Amount        3. Amount to     4. Amount          5. Line Item
            Source           Available        Fund Item        Remaining
          RMDZ Loan       $ 20,190,550     $   1,000,000      $ 19,190,550         Direct Loan
          FY 2006/07

          1. Resolution Number 2007-15

      A. Program Staff: Daisy Kong                                       Phone: (916) 341-6528
      B. Legal Staff: Shelly Bromberg                                    Phone: (916) 341-6076
      C. Administration Staff: Kelley Tyack                              Phone: (916) 341-6095

         A. Support
            The Zone Administrator for the Long Beach Stanislaus County Recycling Market
            Development Zone has provided input and support for this project.

         B. Opposition
            Staff has not received any written opposition at the time this item was submitted for

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