What this document is
The commercial structure of one Circular Supply Agreement for Hillsboro and Hill County — deployment from 100 to 2,000 TPD, the Beneficiation Fee, the Circular Royalty™, risk and timeline.
- Phase Initial at 100 TPD (36,500 TPY) is the entry point; the CSA scales to 2,000 TPD without renegotiating commercial terms.
- One CSA, no election: the County pays $100/ton and receives a Circular Royalty™ from 13 months after the first fee payment.
- Zero County capital at any phase; Phase Medium and beyond depend on regional partnership volumes that are not yet contracted.
Hillsboro, Texas
Circular Supply Proposal
A 30-year Circular Supply Agreement converts Hill County’s disposal spend on the I-35 corridor into a royalty return, at zero County capital.
§1 Transaction Structure
§1.0Regulatory Predicate Transition (RPT)
Advanced Circular Manufacturing is a manufacturing process, not a waste-management activity. Microwave Catalytic Reforming operates in an anoxic, oxygen-free, sub-atmospheric environment — mechanistically incompatible with combustion or biological degradation. ACM does not fit within the waste domain and does not operate under waste-domain statutes. The Regulatory Predicate Transition (RPT) — also framed as the dewaste pathway — is the coordinated regulatory shift from legacy disposal-predicate statutes onto manufacturing-predicate classifications. 100% elemental recycling of the municipal material stream requires this transition. Manufacturing NAICS 325180 · 325998 · 327992 · 331110 · 331314 · 331492 (6-code ACM set) plus EPA RCRA §1004(27) / 40 CFR §261.2(e) exclusion pathway in the US; ISIC Rev.4 20-25 + UN CPC 89 internationally. In many jurisdictions the required authorities already exist in latent form within existing statutes; in others the transition requires primary-authority amendments. The Joint Working Group phase includes a regulatory engagement workstream to shepherd the RPT alongside site permitting. Both parties commit to the RPT pathway. Carbotura brings the process-classification evidence, regulatory engagement expertise from prior ACM deployments, and the legal-technical framework. The counterparty brings the standing to engage the local regulator, the political mandate for the transition, and — where applicable — legacy statutory authorities that can be re-instrumented for manufacturing use. The endpoint is categorical: manufacturing classification across all permitting, licensing, and regulatory contexts. Interim bridging authorities may apply during the transition.
§1.1Commercial Structure
The proposed instrument is a 30-year Circular Supply Agreement (CSA) between Carbotura and the City of Hillsboro / Hill County (anchor counterparty), with optional CSA addenda for Fort Worth and Waco partnership entry under separately negotiated instruments.
Carbotura's commitments under the CSA
- Build, own, operate, and maintain the ACM facility for 30 years
- Fund 100% of capital construction (BOO structure)
- Pay Circular Royalty™ equal to 120% of contemporaneous Beneficiation Fee per ton, with +1pp/year escalator, paid 13 months in arrears on a rolling monthly basis
- Deliver designed environmental performance (carbon-negative net operations; near-zero landfill diversion of committed streams)
- Pursue the Regulatory Predicate Transition (RPT) pathway jointly with the counterparty throughout the CSA term
Counterparty's commitments under the CSA
- Direct committed feedstock streams to the ACM facility
- Pay Beneficiation Fee per ton delivered ($100/ton base, 2.5%/year escalator)
- Honor 30-year CSA term subject to standard force majeure and cure provisions
To preserve Phase Initial COD Q2 2028, the procurement decision (CSA execution authorization) is required by Q2 2026 — effectively concurrent with engagement start. Each six-month slip past Q2 2026 moves Phase Initial COD month-for-month and reduces Year-2 Royalty receipts by approximately $1.8–$2.2M. At Phase Expanded scale, each six-month slip costs $25–35M cumulative Royalty.
§2 Deployment Architecture
§2.1Phase Configuration Table
| Phase | TPD | Modules | TPY | % Inferred Resource | COD Target |
|---|---|---|---|---|---|
| Phase Initial | 100 | 1 | 36,500 | 2% | Q2 2028 |
| Stage 2 | 200 | 2 | 73,000 | 4% | Q3 2029 |
| Phase Medium | 400 | 4 | 146,000 | 8% | Q4 2030 |
| Stage 4 | 1,000 | 10 | 365,000 | 20% | Q1 2032 |
| Phase Expanded | 2,000 | 20 | 730,000 | 40% | Q2 2033 |
Module math: ceil(TPD/100). All CODs anchored to T0 = Q2 2026 per Carbotura standard deployment schedule.
§2.2BOO Capital Structure
Zero counterparty capital expenditure. Zero construction debt on County books. Zero operating liability post-COD. Hill County's sole financial obligation under the CSA is the per-ton Beneficiation Fee. Carbotura funds 100% of project cost through institutional capital under separate SPV structuring. The County's general fund, debt capacity, bonding authority, and credit rating are unaffected.
§2.3Feedstock Stream Coverage by Phase
| Stream | Phase Initial | Phase Medium | Phase Expanded | Access Status |
|---|---|---|---|---|
| Hill County MSW (residential + commercial) | ✓ | ✓ | ✓ | Immediate |
| Hill County C&D residuals | ✓ | ✓ | ✓ | Immediate |
| Hill County industrial / commercial special | ✓ | ✓ | ✓ | Immediate |
| Hill County WWTP biosolids | optional | ✓ | ✓ | Conditional |
| Ellis / Johnson County (adjacent) | partial | ✓ | Conditional | |
| Fort Worth metro extension | ✓ | Partnership pending | ||
| Waco metro extension | ✓ | Partnership pending |
§2.4Site Candidate Analysis
Three priority zones identified within Hill County and the immediate I-35 corridor. Final site selection deferred to Term Sheet phase verification geotechnical, zoning, and environmental review.
The North Hillsboro I-35 Industrial Corridor (P1) optimizes three logistic and commercial criteria simultaneously: (a) I-35 frontage for inbound feedstock from any Hill County or partner-jurisdiction origin; (b) ~10-mile proximity to Republic Itasca LF supporting alternative-disposition negotiations and route convergence; (c) industrial zoning consistent with NAICS manufacturing classification under the Regulatory Predicate Transition (RPT). P2 is favored only if Hill County base-load feedstock-haul minimization drives selection. P3 is favored only if Phase Expanded with Waco partnership materializes early.
Complete Site Candidate Matrix
| Priority | Zone | Acreage | Zoning | Land Authority | Co-location Advantage | Key Consideration |
|---|---|---|---|---|---|---|
| P1 | North Hillsboro I-35 Industrial Corridor | 80–150 ac | M-1 / M-2 Industrial | City of Hillsboro + private | I-35 frontage; 10mi from Republic Itasca LF; central feedstock origins | Parcel availability to confirm during Term Sheet phase verification |
| P2 | Itasca Industrial — adjacent Republic Itasca LF | 40–80 ac | Industrial | Hill County / City of Itasca / private | Adjacent to existing regional disposal; minimal feedstock haul | Smaller acreage; zoning compatibility |
| P3 | South Hillsboro / I-35 × SH-22 Interchange | 100–200 ac | Mixed use / Industrial | Hill County / private | Interchange access for Waco corridor; greater acreage flexibility | Aquilla aquifer proximity — environmental review required |
§2.5Finding: Phase Initial Feedstock Sufficiency
Phase Initial 100 TPD is fully supportable from Hill County feedstock streams currently classified IMMEDIATE. No third-party feedstock partnership, no inter-jurisdictional CSA, and no contract-renegotiation precondition required. Stage 2 through Phase Expanded are independently negotiable additions — each unlocks at the County's pace, with no forced sequencing.
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§3 Economic Structure — Beneficiation Fee
FWDC planning basis: $100/ton blended (Hillsboro Triangle 50-mile catchment) — Estimated. Hill County rural ~$82/ton; Fort Worth metro ~$108/ton; Waco metro ~$95/ton; weighted by phase ramp. Full FWDC confirmation deferred to Term Sheet phase verification.
Beneficiation Fee formula: MAX($100, MIN($150, FWDC − $5))
| Parameter | Value | Source |
|---|---|---|
| FWDC blended planning basis | $100 / ton | Estimated |
| Beneficiation Fee floor | $100 / ton | Carbotura standard parameters |
| Beneficiation Fee ceiling | $150 / ton | Carbotura standard parameters |
| Hillsboro Triangle Beneficiation Fee — Year 1 | $100 / ton | Verified — user-confirmed |
| Annual escalator | 2.5% / year | Carbotura standard |
| Phase | TPY | TMC / ton at Phase Y1 | Annual TMC Obligation |
|---|---|---|---|
| Phase Initial (facility Y1) | 36,500 | $100.00 | $3,650,000 |
| Stage 2 (facility Y3) | 73,000 | $105.06 | $7,669,000 |
| Phase Medium (facility Y5) | 146,000 | $110.38 | $16,116,000 |
| Stage 4 (facility Y7) | 365,000 | $115.97 | $42,329,000 |
| Phase Expanded (facility Y9) | 730,000 | $121.84 | $88,943,000 |
ESTIMATED — derived from FWDC planning basis and Carbotura standard parameters. Final TMC schedule confirms at CSA execution following Term Sheet phase verification FWDC verification.
§4 Circular Royalty™
Royalty(m+13) = TMC(m) × Royalty_Rate(m)
| Parameter | Value |
|---|---|
| Base royalty rate (Year 1) | 120% of contemporaneous Beneficiation Fee |
| Annual royalty rate escalator | +1 percentage point per year |
| Beneficiation Fee escalator | 2.5% / year |
| Payment lag | 13 months |
| Payment basis | Rolling monthly |
| CSA term | 30 years from Phase Initial COD |
| Pre-royalty period | Months 1–12 (Year 1) |
"Gross cost displacement is quantified separately from Circular Royalty™ cash flow.
"At steady state, the Circular Royalty™ is designed to exceed the Beneficiation Fee on a per-ton basis."
"Circular Royalty™ payments begin 13 months after corresponding Beneficiation Fee payments and ramp to full run-rate on a rolling basis."
Fiscal Period Distinction
30-Year Fiscal Schedule — Full Detail
| Year | Avoided Disposal / ton | TMC Paid / ton | Royalty Rate | Royalty Received / ton |
|---|---|---|---|---|
| 1 | $82.00 | −$100.00 | 120% | $0.00 (lag) |
| 2 | $84.05 | −$102.50 | 121% | +$120.00 |
| 3 | $86.15 | −$105.06 | 122% | +$124.03 |
| 5 | $90.50 | −$110.38 | 124% | +$132.46 |
| 10 | $103.00 | −$124.89 | 129% | +$156.25 |
| 20 | $131.00 | −$159.85 | 139% | +$215.72 |
| 30 | $167.00 | −$204.64 | 149% | +$296.77 |
Royalty figures are amounts received. The royalty is paid 13 months in arrears, so the figure shown for a year is earned on the previous year’s delivered tonnage.
§5 Risk Register
| # | Risk | Key Driver | Bearer | Mitigation | Residual |
|---|---|---|---|---|---|
| 1 | FWDC verification | $100/ton blended ESTIMATED | Both parties | Term Sheet phase verification FWDC audit; TMC floor protects downside | Low |
| 2 | Technology performance | MCR commercial-scale operating performance vs. design | Carbotura (BOO) | Performance guarantees in CSA; conversion efficiency thresholds; reserve account | Low |
| 3 | Timeline slippage | Term Sheet phase verification, permitting, financing, construction | Both | Standard 24-month construction window with cure provisions | Medium |
| 4 | Republic Services concentration | 3 of 4 catchment landfills under single operator; escalation exposure | County (incumbent contracts) | Staggered phase scaling; CSA hauler-direction provisions | Medium |
| 5 | Competitive procurement | Other waste-conversion operators may approach catchment communities during window | Both | RPT-aligned first-mover position; 30-year exclusivity in CSA | Low |
| 6 | PFAS regulatory | Federal EPA PFAS rules (2026–2027) may step-change stream disposal costs | County (State A exposure); Carbotura (feedstock spec) | ACM designed for PFAS destruction; feedstock spec in CSA | Low |
§6 Timeline
| Milestone | Target Date | T0 Offset | Notes |
|---|---|---|---|
| T0 — Engagement start | Q2 2026 | T0 | ESTIMATED — confirmation pending |
| Procurement decision deadline (CSA authorization) | Q2 2026 | T0 | Concurrent with engagement start to preserve Phase Initial COD Q2 2028 |
| Term Sheet phase verification complete | Q3 2026 | T0 + 3mo | FWDC audit, geotechnical, zoning, permits framework |
| Phase Initial construction start | Q4 2026 | T0 + 6mo | Following financing close |
| Phase Initial COD (100 TPD) | Q2 2028 | T0 + 24mo | First feedstock delivery; Year 1 TMC begins |
| First Circular Royalty™ payment | Q3 2029 | T0 + 37mo | 13 months after Phase Initial COD; rolling monthly thereafter |
| Stage 2 COD (200 TPD) | Q3 2029 | T0 + 39mo | First scaling step |
| Phase Medium COD (400 TPD) | Q4 2030 | T0 + 54mo | 4 modules |
| Stage 4 COD (1,000 TPD) | Q1 2032 | T0 + 69mo | Conditional on Tier 3 partnership |
| Phase Expanded COD (2,000 TPD) | Q2 2033 | T0 + 84mo | Full 20-module deployment; 60mo from Phase Initial COD |
| CSA term end | Q2 2058 | T0 + 30yr | 30-year CSA from Phase Initial COD |
Hard external deadline framing: No regulatory hard deadline applies. Procurement Decision Deadline = Phase Initial COD − 24 months = Q2 2026. Slippage past Q4 2026 moves Phase Initial COD into 2029. Deferral cost: each 6-month slip ≈ $1.8–$2.2M Year-2 Royalty foregone (Phase Initial scale).
§7 Community Value Stack
County fiscal effects (Royalty receipts, cost displacement) and regional economic effects (employment, regional GDP) are distinct categories — never combined into a single benefit line. §7.1 is County treasury effects. §7.2 is regional economic effects.
§7.1County Fiscal Effects
- Beneficiation Fee paid (outflow): Phase Initial Year 1 at $3.65M annual; escalates with phase ramp.
- Circular Royalty™ received (inflow): $0 Year 1 (13-month lag); ~$4.4M Year 2 (Phase Initial); ~$114M annual at Phase Expanded steady-state.
- Avoided disposal cost (cost displacement, not treasury inflow): ~$3.0M Year 1 → ~$75M+ annual at Phase Expanded.
- 30-year cumulative Circular Royalty™ (Phase Initial only): ~$218M
- 30-year cumulative avoided disposal cost (Phase Initial only, reported separately): ~$165M
- 30-year combined fiscal benefit (full Phase Expanded with Tier 3 partnerships): ESTIMATED ~+$3B+
- Capital obligation: $0.
§7.2Regional Economic Effects
These flow to the Hillsboro Triangle economy — not to the County treasury.
| Phase | Direct FTE | Indirect Jobs (×2.5) | Annual Regional Economic Impact |
|---|---|---|---|
| Phase Initial | 25 | 63 | ~$4M |
| Phase Medium | 70 | 175 | ~$14M |
| Phase Expanded | 280 | 700 | ~$58M |
Plus property tax base addition of $75M–$1.17B (phase-dependent capital improvement) for the host jurisdiction.
§8 Why This Works in Hillsboro
Volume alignment. Hill County alone generates ~100 TPD — exactly matching Phase Initial design capacity. The 50-mile catchment plus Tier 3 universe (~5,000 TPD inferred resource) provides the scaling pathway to 2,000 TPD without any single counterparty being load-critical to Phase Expanded.
Infrastructure alignment. Hillsboro's I-35 position is the structural logistics anchor for the entire Hillsboro Triangle. Priority 1 site (North Hillsboro I-35 Corridor) optimizes inbound feedstock haul from any Hill County or Tier 3 origin and is co-located on the same corridor already concentrating regional waste flow toward Republic Itasca Landfill.
Contract timing alignment. No regulatory hard deadline forces an externally driven schedule. Phase Initial commits no partnership negotiation, allowing the County to authorize on its own calendar. The procurement window is structural — driven by regional ACM siting capacity and Republic Services' escalation trajectory.
Policy alignment. The Regulatory Predicate Transition (RPT) (§1.0) anchors the engagement to manufacturing classification under NAICS 325180, 325998, 327992, 331110, 331314, 331492. Texas TCEQ has not issued state-level rules incompatible with this classification, and manufacturing classification (NAICS 31–33) is the controlling federal basis.
Regulatory driver. Federal RCRA classification timing creates a window for first-mover communities under the RPT. Republic Services' three-of-four-landfill concentration in the catchment creates structural counterparty-risk exposure that intensifies with each annual rate escalation cycle.
Economics specificity. Beneficiation Fee at $100/ton derives from the Hillsboro Triangle blended FWDC planning basis ($100/ton ESTIMATED, weighted by phase ramp across Hill County, Ellis, Johnson, S. Tarrant, McLennan, and partnership-extension sub-catchments). Calibrated to this community's actual disposal-cost trajectory — not a generic figure.
★ Basis of Presentation
This document defines the commercial structure, deployment architecture, fiscal terms, and community value of the proposed 30-year Circular Supply Agreement with Hill County, Texas. Each parameter is classified by confidence tier. Final values confirm during Term Sheet phase verification following procurement decision authorization.
| Parameter | Value Applied | Basis | Confidence |
|---|---|---|---|
| Beneficiation Fee — Year 1 | $100/ton | User-confirmed at engagement intake | Locked |
| FWDC blended planning basis | ~$100/ton | Texas regional gate rates + collection increment — modeled | Estimated |
| Phase Initial 100 TPD / 36,500 TPY | COD Q2 2028 | User-confirmed scaling pathway | Locked |
| Phase Expanded 2,000 TPD / 730,000 TPY | COD Q2 2033 · Conditional on Tier 3 partnerships | User-confirmed; partnership conditionality noted | Locked |
| Royalty formula and parameters | 120% base · +1pp/yr · 13mo lag · rolling monthly | Carbotura standard parameters — locked | Locked |
| T0 anchor | Q2 2026 | Carbotura standard deployment schedule; confirmation pending | Estimated |
| Employment figures | 25 / 70 / 280 direct FTE (PI / PM / PE) | Carbotura standard FTE-per-TPD ratios applied to Hillsboro phasing | Estimated |
| Site candidates (P1, P2, P3) | Three I-35 corridor zones; P1 North Hillsboro preferred | Geographic and zoning analysis; pre-Term Sheet phase verification | Provisional |
| Operator verification | Republic Services ×3, WM ×1, Frontier Waste ×1 | Google Places + NYSE filings, April 2026 | Verified |
Unresolved Data Gaps
- Hill County stream-specific FWDC — Frontier Waste and Republic Services contract terms; resolved during Term Sheet phase verification.
- T0 confirmation — procurement decision authorization date.
- Tier 3 partnership entity commitments (Fort Worth / Waco) — inter-jurisdictional coordination 2026–2028.
- Texas TCEQ permit timeline — pre-application engagement during Term Sheet phase verification.
Confidence tiers: Locked = user-confirmed or contractually standard Verified = sourced to named public record Estimated = Carbotura-modeled with stated methodology Provisional = pre-Feasibility-Study placeholder.