City of Tacoma, Washington reduced its cost of biosolids management from $60/wet ton to $26.50/wet ton by diversifying its TAGRO product line and growing its customer base.
BioCycle June 2014
The sewer bill sent to households reflects the charges of treating their wastewater. A major part of those expenses is the cost associated with managing the biosolids that are generated in the process of wastewater treatment. Cities routinely pay for biosolids to be hauled away and often pay for farmers to use them. What would happen if a municipality started really viewing biosolids as a product and asking people who want them to actually pay for them? The City of Tacoma, Washington can provide some answers to that question.
Recently, the City of Tacoma made a simple change to its accounting related to TAGRO, its biosolids product line. Rather than expecting the biosolids program to be a net cost center for the municipality, it has started operating as a profit center. This is not just a change in accounting practices; it is a change in the mission and mindset of the program. The TAGRO division now has the goal of maximizing revenue instead of operating within budget. This has enabled the division to actively develop products and seek customers rather than simply trying to dispose of the biosolids.
Under the new accounting system, expenses and revenues for TAGRO soil products are tracked separately from the wastewater treatment division. “This isn’t a huge change for us operationally,” explains Dan Thompson, Division Manager of Wastewater Operations at the City of Tacoma. “The change was simply how accounting was performed. But now we can measure our performance based on profits, and grow as a revenue-generating program. This gives the program flexibility and an incentive to manage the biosolids in a way to maximize revenue coming in and minimize revenue going out.”
Tacoma, located 30 miles south of Seattle, has two wastewater treatment plants (WWTP) that provide secondary treatment. The average combined flow is about 27 MGD, yielding between 3,500 to 4,000 tons/year of dry solids in total. The Tacoma Sewer Utility has a dual digestion system at its Central Plant that treats solids from both WWTPs — first stage aerobic thermophilic digesters fed pure oxygen, followed by a set of digesters operating in an anaerobic thermophilic/ mesophilic range. The resulting Class A solids are dewatered in a two-stage belt filter press. The city earned the U.S. Environmental Protection Agency’s Class A Exceptional Quality (EQ) rating for the biosolids generated when this dual digestion system was put into place.
TAGRO — short for “Tacoma Grow” — is made from all the Class A EQ biosolids generated. The biosolids are mixed with sawdust, aged bark, woodchips and/or sand, depending on the recipe for the final product. In total, 40,000 to 50,000 cubic yards (cy) of TAGRO products are made annually.
When the City of Tacoma introduced TAGRO in 1989, the strategy was to develop a strong customer base by courting as many small customers as possible. It started by trying to give away the Class A biosolids cake but quickly realized that the Class A designation, while meeting the EPA requirements for excellence, did not meet the criteria for a customer-friendly product. As a result, TAGRO Mix was created — a blend of 50 percent Class A biosolids and 25 percent each of sawdust and screened sand. The mix had a soil like appearance and a much more palatable aroma than the biosolids cake. It was well received by local residents, who initially could pick it up at the plant for free (the city started selling TAGRO around 1992). The city also started a garden at the plant, with product entered into contests at the State fair (its entries won prizes). “We started from the inside out,” Thompson notes. “Typically biosolids [recycling] programs look for the big customer who can sustain it. You have no control over supply so at the end of the year, you want a reliable customer who will take it all off your hands. We didn’t build our program this way.”
Instead, TAGRO relied on the citizens of Tacoma who used TAGRO Mix on their home gardens and lawns. This strategy developed trust in the community to use biosolids but it didn’t necessarily result in profits. Operational changes and product improvements spurred expansion of the program, particularly in 2003 with the addition of TAGRO Potting Soil, a nutrient-rich blend of 20 percent biosolids, 20 percent high-quality maple sawdust and 60 percent clean, aged bark.
Today, TAGRO Mix sells for $10/cy in bulk. City residents needing only a small amount can shovel it themselves from the designated “free pile” at Tacoma Central at no charge. TAGRO Potting Soil sells for $30/cy in bulk. Customers wanting a small amount can bring a few containers or buckets and can purchase a cart’s worth (approximately 4 cubic feet) for $5. Bagged potting soil is also available at the TAGRO facility for under $6/cubic foot or from local retail outlets at a similar price.
Recently, a new soil mix, TAGRO Topsoil, was added to the product line with a goal of expanding into new markets. The topsoil is a blend of biosolids, aged bark and wood chips that meets the City of Tacoma’s specifications for a Type IV soil; contractors are allowed to use the product in projects where this type of soil is specified. “TAGRO Topsoil has more structure than other TAGRO mixes but still provides some nutrients so it is well-suited for highway right of way projects,” explains Thompson. “It currently sells for $23/cy. We hope this will attract a new base of larger commercial customers to further sustain the program and increase revenues.” In 2013, 10,000 cubic yards of TAGRO Topsoil were sold.
Overall, about 4,500 small customers purchase TAGRO products, along with about 80 to 100 landscapers and nurseries, he adds. These customers primarily buy the original TAGRO Mix and TAGRO Potting Soil — around 25,000 and 20,000 cubic yards of each product respectively.
As TAGRO expands on its already stable customer base, Thompson is confident increased revenues, measured as total sales, will follow. He predicts TAGRO will see a 10 percent increase in revenues in 2014, though he is optimistic this could be as high as 30 percent. Last year the program sold about $650,000 worth of products and services, including delivery and application of products. This includes gross revenues of $492,297 for TAGRO bulk products and $24,588 for the bagged product in 2013; services made up the remaining $133,115. “Our dream is to hit a million bucks in two years,” he notes. “I would put a number on it but we don’t know this [topsoil] market very well plus it’s very volatile.” So far developing a topsoil suitable for larger scale contracts has brought a lot of business to the TAGRO program.
However, profit margins from the venture are still unclear. “We are still sorting out the new accounting system,” says Thompson. Despite this, it is clear that manufacturing a biosolids product is still more profitable than land application. Including some costs and revenues that are being accounted for incorrectly as the new system is worked out, he estimates the cost to Tacoma to manage biosolids is reduced from $60/wet ton to $26.50/wet ton when TAGRO sales are factored in. The city also plans to take in and digest solids from other plants, charging a tipping fee as well as getting revenue when the product is sold.
Another advantage to operating as a profit center is that the TAGRO program qualifies the Tacoma Central Wastewater Treatment Plant to be exempt from sales taxes under the Washington Manufacturer Sales Tax Exemption. Similar laws have been passed in other states such as Texas, Kansas and Utah, which allow businesses manufacturing a product for sale to be exempt from sales tax on equipment purchases. As TAGRO manufactures soil amendments with biosolids produced by the WWTP, the law can be applied to both TAGRO and the plant. This saved the city nearly $8 million in a recent $80 million plant upgrade that included improvements in pumping capacity, a new grit removal system and an updated headworks.
This cost savings and the additional revenues associated with biosolids reuse will be passed on to ratepayers in the form of lower rates. It also allows the city to purchase more property to expand production of TAGRO products and other services. With such successes, Thompson expects the reuse of biosolids to remain an integral part of Tacoma’s wastewater treatment operations far into the future.
Katrina Mendrey is a Contributing Editor to BioCycle.