Unfortunately, those foam peanuts are not recycled, but lots of places will take donations, especially of large amounts. Here's our guide to the peanut problem: https://earth911.com/recycling-guide/how-to-recycle-packing-peanuts/
I used to take these to UPS, but called them today and they said the city made it "illegal" to donate them.
I read that a few organizations here purchased a machine a few years ago to melt down these and/or styrofoam to make a denser form that can be used. I don't know what happened with that.
Your city's decision, like many, is related to the Chinese recycling imports ban. Many cities are utterly at a loss with what to do with their waste now that it can't be shipped overseas. Yet there are many local recyclers looking for material.
The problem with foam peanuts, which are expanded foam, is that they cannot economically be recompressed. The project you mention couldn't make any money -- another, related material, Styrofoam, costs $1,000 to produce $200 worth of a usable material.
Maybe I can take a few bags off of you... I know a person in Ventura who loves having these for her mailings...
You can find who wants them by going on nextdoor.com and letting peeps know you have them. Likely there's someone in the neighborhood who wants them... Or, my local UPS is still taking them, fyi.
Hope you can find some good use of those foam. When we ordered a couple of delicate products from Amazon and 4WheelOnline, my aunt gathered those foam and fill them on a old bathroom plastic door. She cut the old door into portions to make a wall for the dog house the use the foam as filler for insulation.