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Meeting
Minutes
Tuesday, October 28, 2014 at 6:30 p.m.
1.
Introduction / Call Roll
Vice Chair Gjerdingen called the
meeting to order at approximately 6:30 p.m. and Public Works Director
Schwartz called the roll.
Members
Present: Vice Chair Steve Gjerdingen; and Members Brian Cihacek, Joe Wozniak,
Joan Felice, Sarah Brodt Lenz, and Duane Seigler; with Chair Dwayne Stenlund
arriving at approximately 6:50 p.m.
Staff
Present: Public Works Director Duane Schwartz and City Engineer
Marc Culver, and Finance Director Chris Miller
2.
Public Comments
None.
3.
Approval of September 23, 2014 Meeting Minutes
Member Cihacek moved, Member Lenz
seconded, approval of the September 23, 2014, meeting as amended.
Corrections:
·
Page 2, Line 52 (Gjerdingen)
Typographical correction: Remove
extra dollar sign
·
Page 5, Lines 215-217 (Wozniak)
Correct spelling of speaker’s
name: Should be Anders[e]n; and change all instances
Correct date from “3020” to
“2030”
·
Page 6, Lines 232-233 (Wozniak)
Correct first sentence to read:
“Mr. Andersen revised the grant program awarded June 1, 2014 by the
Ramsey/Washington County Resource Recovery Project.”
·
Page 7, Line 266-268 (Wozniak)
·
Correct to read: “Mr. Andersen noted that Minnesota WasteWise
offered a free assessment for each business and specific to what they needed
to recycle, …”
Page 7, Line 305 (Wozniak)
Typographical correction from
“The Lode” to The Lodge”
·
Page 9, Lines 387-389 (Wozniak)
Delete lines in their entirety
(Recording Secretary’s original notes inadvertently not deleted previously).
·
Page 11, Line 456 (Seigler)
Correct to read. “…hundreds of
thousands of dollars in their homes…”
·
Page 16, Lines 694 – 698 (Gjerdingen)
Correct to read: “Member
Gjerdingen requested a review of current sidewalk policies in place for
public information (e.g. seasonal sidewalk maintenance) that are publically
posted, whether electronically or written – and what is legally written out
for review, and also current laws. This could include a recommendation to
the Parks & Recreation Commission and/or City Council if the PWETC found
any gaps.”
Ayes: 6
Nays: 0
Motion carried.
4.
Communication Items
Mr. Schwartz and Mr. Culver
briefly reviewed project updates and maintenance activities listed in the
staff report dated October 28, 2014.
In response to numerous phone
calls, and questions of the PWETC, Mr. Culver explained the recent addition
of blue lights on random traffic signals by Ramsey County, and their
purpose. Mr. Culver advised that a grant had been received by Ramsey County
to assist in addressing frequent running of red lights; with this tool
currently used in other areas across the State of Minnesota, and called “red
light confirmation lights” or “blue enforcement lights.” Mr. Culver noted
that these lights are installed on the back side of the signal head it’s
mimicking, with the blue light on when the opposing red light is on. Mr.
Culver noted that the intent is that the officer can be on the far side of
the intersection and if a vehicle proceeds on a red light, it can be aware of
that and intercept the vehicle when it reaches their location, creating a
safer enforcement option for one officer to manage. Mr. Culver noted that
these lights had been used successfully to-date on Highway 13 in Burnsville,
in St. Cloud, and Ramsey County was in the process of installing them on
several local problematic roadways, including Lexington Avenue from County
Road E to Larpenteur Avenue; Larpenteur Avenue from Highway 280 to Lexington
Avenue; County Road D from I-35 to Highcrest Avenue; and on the west side of
Highway 96. Mr. Culver noted that the lights were very bright in order to be
seen during daylight hours.
Member Wozniak noted another
problem area south of County Road B-2 on a weekday morning; with Mr. Culver
responding that Ramsey County was aware of the problem areas and frequent
traffic light running.
Mr. Schwartz noted the addition
of the leaf program registration card in the meeting packet materials for
information purposes for the PWETC, noting that the collection program would
begin November 3, with the City of Roseville divided into four quadrants.
For the benefit of the listening audience, Mr. Schwartz advised that there
were still a few remaining days to register for the leaf collection program.
Vice Chair Gjerdingen noted that
the public needed to be aware that any leaves raked onto boulevards after the
City or Roseville performed their collection in their neighborhood would not
be picked up.
Mr. Schwartz noted that the
public was alerted to this repeatedly, as well as reminders not to put leaves
on the sidewalk or on the street to avoid them ending up in the storm sewer
system.
Member Wozniak noted a number of
remaining areas along the County Road B-2 sidewalk with missing asphalt and
remaining coned off.
Mr. Culver responded that this
coming Friday, the remaining areas will be milled and overlaid with a 3’
patch, as required by MnDOT, and requiring special equipment, thus the
delay. Mr. Culver noted his disappointment that the areas had been left open
this long; however, he noted that it was difficult to stop people from using
the areas even though construction was not yet completed. For the most part,
Mr. Culver reported that the County Road B-2 work was completed, and noted
the considerable positive feedback from residents using it as construction
was finalized, offering a lot of support, and expressing excitement to
celebrate this milestone in completing the segment all the way to Rice
Street.
Member Wozniak noted the Victoria
Street to County Road C is also completed, which he was pleased to see.
Member Lenz noted a portion of
Victoria Street where an unimproved footpath crosses the road from the west
side of the park to the east side, even though not at a crosswalk, but is
used frequently by pedestrians. Over the last thirty years that she’d been
observing the area, Member Lenz noted that she had yet to see anyone deviate
by proceeding up the hill to cross the street, and suggested it may be time
to stripe the location actually being used by pedestrians for crossing.
While Member Wozniak noted that a
pedestrian crossing was striped near Transit Avenue, Member Lenz reiterated
that no one goes up to Transit, but comes out of the south end loop and
crossest the street there. Since this crossing had been used long-term,
Member Lenz suggested the path of least resistance, and inability to change
human behavior, would suggest a striped crossing where pedestrians actually
crossed.
Mr. Culver noted that a
complication with that rationale was that a pedestrian ramp would need to be
installed and the sidewalk therefore moved out to make the pedestrian ramp
work; and include all pedestrian amenities.
Chair Stenlund arrived at this time, approximately 6:50
p.m.
5.
2015 Utility Rate Proposal
Mr. Schwartz welcomed Finance
Director Chris Miller to provide staff’s annual utility rate analysis and
proposed 2015 rates for PWETC review and information; and as detailed in the
staff report dated October 16, 2014 (Attachment A).
Mr. Miller noted that the annual
analysis considered current water sewer rates for any potential adjustments
for the projected 2015 budget year, including long-term capital improvement
program (CIP) needs for long-term operations.
Mr. Miller reviewed the
recommendations in detail and near-term financial needs to support operating
and CIP budget needs. For the most part, Mr. Miller advised that the
majority of single-family homeowners would see a reduction in their 2015
utility bills (as indicated in the chart on page 1 of Attachment A). With
few exceptions, Mr. Miller advised that general day-to-day operations and CIP
needs were fairly in check.
Mr. Miller noted that the
decrease in rates was primarily due to the elimination by the City Council of
the current senior discount rate, moving to a financial needs based discount
program for the benefit of all residents, no matter their age. Mr. Miller
noted that this was based on a financial threshold eligibility requirement at
165% of the federal poverty threshold guidelines. Mr. Miller advised that
this would result in approximately 25% of the current single-family
households, currently receiving the senior discount rate, seeing their
utility bills increase on average of $30 per quarter; while the remainder of
the residents currently subsidizing that program no longing having to do so,
eliminating the approximate $250,000 to $260,000 they currently pay annually
to subsidize the senior discount program. Because of that change in policy,
Mr. Miller advised that most homes in Roseville would now revert to paying
full rate water and sewer rates, based on the 2015 proposed budget and
twenty-year CIP needs. Mr. Miller noted that the City Council had been
having ongoing discussions for a few years about the equity in continuing the
senior discount rate program, and advised that he anticipated another
discussion by the City Council at their November 17, 2014 meeting. While
there may be additional changes and directives to staff following that
discussion, Mr. Miller advised that the 2015 rates and assumptions were built
into the proposed budget at this time.
Mr. Miller referenced rate
comparisons done annually with peer communities (chart on page 6 of
Attachment A), with those comparisons among other first-ring suburbs and
water systems, usage and populations roughly mirroring those of the City of
Roseville, including the age of the infrastructure and community, which
played a huge role in the rate structure as well. In context, Mr. Miller
noted that Roseville rates are typically higher than average, partially due
to the current infrastructure replacement cycle for the City, which was now
in its fourth year, and rates significantly increased over the last few years
to initiate that long-deferred replacement of infrastructure and associated
additional costs. Mr. Miller noted that part of the difference in rate
structures could be attributed to the fact that some of the other first-ring
suburbs may not be in that replacement cycle, whether they had already
completed rehabilitation and replacement of their infrastructure, or had yet
started to do so.
Mr. Miller further noted that the
City of Roseville did not rely on special assessments for any replacements or
rehabilitation of water/sewer mains, or relining work, but funded that work
in advance through its rate structure to fund overall City infrastructure
needs, which was different than many other cities, but an inherent reason for
higher rates than other cities as well. Mr. Miller noted that this was a
philosophical difference established by past and the current City Council to
fund those and other indirect costs through the rate structure versus the tax
levy alone.
Mr. Schwartz further noted that,
when reviewing the water comparisons on page 6, those at the lowest rate did
not soften their water, but the homeowners incurred that expense; while those
higher rate communities, like Roseville, softened the water at the treatment
plan, which also had a bearing on water costs as well. As an example, Mr.
Schwartz noted that the City of Brooklyn Center, with the lowest rates, did minimal
water treatment, after it was pumped from wells.
Based on all of those nuances and
the background and context, Mr. Miller referenced rate impacts for 2015 (page
4) and philosophical differences in how to fund utility operations (page 7)
and comparisons according to those philosophical differences among peer
communities. Mr. Miller noted that in 2009-2010, the gap between the City of
Roseville and this same peer group of communities was only 3%, with the City
then implementing sizable rate increases from 2009 – 2011 to ramp up the
infrastructure replacement and rehabilitation program. Mr. Miller opined
that this gap had not always nor would it continue to be the norm; and
anticipated that the gap would come back down in the next five years as other
cities fund infrastructure improvements.
Mr. Miller reviewed the
comparison rates in the chart on page 8 of Attachment A, indicating that for
2014 when property taxes and water/sewer rates were compared among that same
peer group of cities, Roseville had been 13% below average when other impacts
were factored in for single-family homes, having higher water/sewer rates, but
lower property taxes by comparison. Mr. Miller advised that there was more
detailed included in the report on pages 4-5 for all types of housing stock
in Roseville.
Mr. Miller noted staff’s
recommendation to the City Council for their consideration at their November
meeting; and welcomed any thoughts and/or comments of the PWETC.
At the request of Member Cihacek,
Mr. Miller advised that there was some overlap in staffing among operations,
but mostly split 50/50 and reflected in the tables.
At the request of Member Seigler,
Mr. Miller advised that property taxes were based on a typical single-family
home, with median value for 2014 at $194,000, with that home’s value
increasing for 2015 by 11% to $210,000.
Member Felice sought an update
from staff on a tiered water rate to encourage residents to conserve water.
Mr. Schwartz advised that the
PWETC proposed a new rate structure to the City Council two years ago, that
would add another tier for conservation rates. However, Mr. Schwartz
reported that, at that time, the City Council chose not to go in that
direction; and at the time actually suggested one rate, but staff had
encouraged the City Council to retain the current two tiered rate structure
until a longer term analysis could be done to see what if any impact it was
having on consumption.
At the request of Member Lenz,
Mr. Miller reviewed the application process for residents seeking an
income-based utility rate discount. For consistency purpose, Mr. Miller
advised that the City was taking the opportunity to use other resources
already doing an income verification process, namely Ramsey County, who
offers a number of financial aid programs that are tied to a similar program
being considered by the City of Roseville. Therefore, if a resident is already
receiving financial assistance from Ramsey County, the City of Roseville
relies on that income verification application process, and the resident will
simply have to present a confirmation letter from Ramsey County that they had
been accepted into such a program. With a copy of that letter provided to
City staff, Mr. Miller advised that there was no need for the applicant to
provide financial information to the City, simply the letter itself.
Member Lenz expressed
appreciation that there would not be any additional opportunity for data
breaches using this method, Mr. Miller concurred, noting that this was one of
the reasons the City had settled on this, in addition to no more tax dollars
needed for staff to perform redundant income verification procedures.
At the request of Member Seigler,
Mr. Miller advised that the projected increase in 2015 of personnel costs at
3.4% was historically comparable to existing staff over the last 5-10 years,
at around a 3% average increase when factoring in wages and benefits; with
benefits typically representing 20% of wages. Mr. Miller noted that the
unions, in their contract negotiations, had settled at a 2% increase for
2015.
Mr. Schwartz noted that the
percentage increase for costs for employee insurance benefits had exceeded
pay increases over the last 5-10 years.
Member Cihacek sought staff’s
assumptions for supply costs, based on prime inflation rates or how they
determined those assumptions.
Mr. Miller responded that, while
the City uses the Consumer Price Index (CPI) for inflation projections and
assumptions, it was different when determining supply/maintenance for the
water/sewer structure from that typically used for individuals determining
increases for groceries, gas and household supplies, with Mr. Schwartz also
factoring in inflationary costs based on cost trends provided by suppliers.
Historically, Mr. Miller advised that they remained close to inflationary
costs; however, noted that they could range from 2% to 4% depending on the
type of supplies and materials needed.
Member Cihacek asked staff for
specifics for containing prices for these commodities.
Mr. Schwartz responded that the
majority of the department’s expenses were personnel or equipment related in
the water/sewer utility funds, with staff purchasing supplies, materials and
equipment off state contracts for the most part when available. Mr. Schwartz
advised that the major driver for water/sewer rates were for costs attributed
to the wholesale cost of water and treatment of sewage, representing
approximately 80% of the rates. Mr. Schwartz advised that the City had been
experiencing higher than general inflationary costs from the Metropolitan
Council and Saint Paul Regional Water Services, which was driving the rates
more than local costs.
At the request of Member Seigler,
Mr. Miller responded that the storm water drainage rates were being driven
mostly by the age of existing infrastructure, with most of the lines
providing 50-65 years for a typical life span, and the cost to build a sewer
main is depreciated over 50 years. Mr. Miller advised that the preferred
process would be to set aside a little money over that 50 year cycle to be
available when replacement was needed.
At the request of Member Seigler,
Mr. Miller advised that the replacement cycle was now occurring with the
twenty-year projected CIP; however, he clarified that it had not been done
diligently in the past, which created the rate hikes for 2015 as shown, with
depreciation averaged out, and dollars actually averaged out, but capital
spending fluctuating from year to year.
Specific to recycling, Member
Wozniak noted that similar amounts of material were being collected, but
their value was being projected at half their previous value.
Mr. Schwartz advised that Eureka
Recycling was finding that the tonnage collected in covered versus open bins
was often lighter, due to the materials being drier. From the standpoint of
value of the materials, Mr. Schwartz noted that changes in some metal and
glass markets were being experienced, with one large glass processor in the
Twin Cities area closed down, creating a real negative impact on the revenue
being received for that glass material, which was now being shipped to
Chicago for processing.
Chair Stenlund asked if staff had
observed a change in water consumption trending per capita in Roseville,
since there was no reward being offered for those conserving water at less
than 30,000 gallons, other than personal satisfaction.
Over the last 5-10 years, Mr.
Miller advised that he had observed a general decline in overall water
consumption in the community, especially when broken down from single-family
residential and commercial users. Mr. Miller noted that overall summertime
usage had gone down, but admitted that was frequently dependent on the amount
of rain during the month or season and the need for irrigation. Mr. Miller
noted that the City had lower per household occupancies than other suburbs
and therefore compared favorably, especially with other second- and
third-ring suburbs. When considering rate incentives for conservation, based
on winter household using, Mr. Miller opined that residents were doing a good
job, and he was finding limited excessive usage situations.
At the request of Member Lenz,
Mr. Schwartz addressed winter temperatures and the need to run water if water
temperature registered below 35 degrees, potential with staff not
anticipating the need unless we experience sustained below zero temperatures.
Staff will monitor frost levels and communicate concerns if necessary. Staff
will also communicate with those on long term freeze up lists as to when to
turn on their siphons.
Chair Stenlund asked staff to
provide the PWETC with a graph of comparative water use compared with other
cities, and whether consumption was trending up or down. Chair Stenlund also
asked staff to prepare a report on how the City was doing in addressing
leakage of sanitary sewer and/or water lines, based on Metropolitan Council
monitoring.
On the potable water side, Mr.
Schwartz advised that a system-wide detection system was completed every five
years through hiring of an outside consultant with listening devices to check
all mains. As of the last detection, Mr. Schwartz advised that it was
determined that there were only a few leaks detected and those were
corrected. Staff was confident the water system is in general good condition.
There are still occasional water
main breaks experienced during cold weather months.
From the sanitary sewer side, Mr.
Schwartz advised that the City of Roseville, for the period of May/June of
2014, received another surcharge penalty letter from the Metropolitan
Council, placing the City back on the list of cities needing to reduce its inflow
and infiltration into the system. Mr. Schwartz advised that the City is
currently required to invest a minimum of $170,000 annually to reduce inflow
and infiltration due to the surcharge program. With current lining of
sanitary sewer lines, sealing manholes, and other steps taken to-date, Mr.
Schwartz advised that the remaining and more difficult task was to investigate,
understand, and identify private sanitary sewer service laterals where
suspected sump pumps and/or rain leaders from roofs are connected to the
sanitary sewer system rather than the storm sewer system.
6.
Solar Discussion Continued
Mr.
Schwartz introduced Mr. David Streier from Newport Partners, LLC to review
solar panel financial opportunities and implications for potential PV solar
installations on the city campus. Mr. Schwartz advised that the City of
Roseville had partnered with this firm several years ago for a solar system
installation on the City Hall/maintenance buildings, but funding had been
unsuccessful at that time.
Mr.
Streier proceeded with his presentation, a copy of which is attached
hereto and made a part hereof.
Mr.
Streier’s presentation included potential solar installations; applications
previously submitted under the Made in Minnesota program for Xcel Energy awards;
the new incentive program administered by the State Department of Commerce
with legislation enacted in 2013, with 2014 the first funding year for the
program, running for a total of ten years for a production-based incentive,
with the more KWh’s generated, the more incentives paid out based not only on
the size of the system but actual output for well-sited and well-constructed
systems.
Mr.
Streier reviewed his local representation and the background of Newport
Partners, based in California, also owners of Silicon Energy, with solar PV
manufacturing facilities in the State of Washington and also in Mountain
Iron, MN.
Specific
to the potential partnership of Newport Partners and the City of Roseville,
Mr. Streier reviewed the ten year lease program and municipal solar financing
program details, designed to leverage federal solar tax incentives not
otherwise available to municipalities, with a down payment of approximately
5% of the project cost and the City making annual power payments to Newport Partners
for electricity produced by the solar system at a discounted rate, creating
immediate energy savings. After ten years, Mr. Streier noted that the City
could “off-ramp” for the cost of approximately one year’s power payment,
which was structured and vetted to comply with Xcel Energy and Internal
Revenue Service regulations. Mr. Streier detailed the system purchase
agreement that would include Newport Partners designing, engineering, and
providing a turnkey proposal integrated to include all permitting
requirements; with the City owning the system as an Xcel customer, with
Newport Partners administering the system sale and installation agreement
through a qualified silicon energy subcontractor.
At
the request of Chair Stenlund, Mr. Streier responded that Newport Partners
would provide a subcontractor with special training to install their
manufactured modules, which were different than some currently on the market,
and would vet them through a system purchase agreement and lease agreement
for the roof system itself and a power purchase agreement, with an option
included for Newport Partners to turn the system over to the City at year 6
or year 10, once federal tax incentives are completed, depending on the final
costs.
Since,
under Minnesota State Statute, Mr. Streier advised that financing terms were
in compliance with municipal contracting laws, it was not necessary to seek
Requests for Proposals or to award to a low bid, since his firm provided an
energy savings guarantee over the twenty year period in accordance with State
Statute. However, Mr. Streier advised that the City would realize a positive
return on its investment within ten years.
At
the request of Member Seigler, Mr. Streier reviewed repayment of the
investment by the City to Newport Partners with 85% of the energy production,
with the City retaining a minimum of 15%; with Newport Partners paying the
City rent for the solar energy system space on city property, based on Xcel
Energy contract rates and lease terms, with the solar project eventually
reverting to the City as owner of the system.
At
the request of Mr. Schwartz, Mr. Streier reviewed the fifteen year life cycle
of the inverters and their required or projected maintenance; improved
technology for Newport Partners modules using micro inverters installed
closer to the modules with a higher upfront cost, but providing much better
efficiencies.
Specific
to the application process itself, Mr. Streier reviewed the intent of Newport
Partners to secure Made in Minnesota incentives via the lottery application
process held annually from January 1 to February 28, with necessary paperwork
needed between now and February 28th, and no application fee
required. Mr. Streier advised that there was more competition for commercial
applications, with only 1 in 3 applications approved in 2013; and therefore,
he encouraged the City to apply for as many as they could qualify for in
2015, since he anticipated even more competition in 2015.
Mr.
Streier advised that the lease structure allowed Newport Partners to leverage
federal tax benefits through the sale of tax credits to investors; and
provides the City with a turnkey proposal, with all engineering, design,
installation and financing costs covered, and the City making annual power
payments to Newport Partners for electricity produced by the system at 85% of
their Xcel Energy contract rate. Mr. Streier further noted that, then after
ten years, the City would receive full ownership of the solar energy system
at a cost of approximately one year’s power payment.
Mr.
Streier reviewed Newport Partners’ product, consisting of silicon energy
photovoltaic modules, called a voyageur PV module versus a cascade system,
and reviewed the advantages of this product economically, and for commercial
roof top installations compared to other types of installations and
maintenance. Mr. Streier advised that this was a glass-on-glass design to
provide maximum durability in Minnesota winters and temperature fluctuations;
and was made in Minnesota, with high efficiency cells to increase power, and
be fully compatible with widely used commercial racking systems and
inverters; with a thirty-year warranty, longer than the typical twenty-five
year warranty for most solar systems in the industry.
At
the request of Chair Stenlund, and excluding the inverters, Mr. Streier
advised that the warranty extended to thirty years, ten years beyond the cost
projections provided in the table provided by Mr. Streier (Attachment A)
showing electricity savings, down payment, and payback periods. Mr. Streier
addressed the power warranty over the first fifteen years, and thereafter,
and replacement cost of panels.
Mr.
Streier displayed examples of their product installations over the last few
years, and their ballasted modular installation versus punching holes in a
roof for some types of installations.
At
the request of Member Cihacek, Mr. Streier reviewed the City’s upfront costs
and payback period for a roof installation and/or utilizing a community solar
garden approach. Mr. Streier advised that there lease was calculated based
on income from the lease for overall tax investors, based on a system of this
size and projected cost of $240,000 and ratios per year. Mr. Streier advised
that for community solar, it had yet to be readied until details were
finalized by the Public Utilities Commission (PUC), as far as what to charge,
and based on whether or not those systems are fully subscribed, and whether
assumptions are accurate after the regulatory process is completed. Mr. Streier
suggested that, if the City decides to pursue community solar, and considers
hosting it and capitalizing installation to come up with 100% from other
subscribers with no out-of-pocket cost for the City, it also needed to be
aware that it would receive no bill credits or energy savings itself.
However, Mr. Streier reviewed other options for the City to be a host as well
as a subscriber, therefore seeing bill credits for the City’s investment
share as a subscriber, with a return on that investment or payback not
provided as an option in his calculations. At this time, Mr. Streier advised
that community solar gardens didn’t have a separate solar incentive, but were
based on an applicable retail rate for now or the value of the solar system
down the line. Mr. Strier noted that if the City was approved for the Made
in Minnesota incentive, it could then attempt to transfer the system in to a
community solar garden and solicit shares; however, he was not confident this
was possible.
At
the request of Member Cihacek, Mr. Streier responded that he didn’t think one
option excluded the other, but suggested the City needed to make a decision
for the Made in Minnesota project, then consider a separate community solar
project; or perhaps indicate on their application that they intended to make
it a community solar garden, which would be considered under a separate
category for the Department of Commerce. Mr. Streier advised that he had not
done any applications under the new Department of Commerce program yet, and
was unsure how that program was locked in.
Member
Cihacek suggested that, after the initial ten year ownership change, the City
would open it back up to a community solar system and offer it to subscribers
at that time.
Mr.
Schwartz cautioned that such an option would need to be confirmed and
verified with regulators first.
Discussion
ensued regarding the installation cost of $240,000, down payments by the City
of $20,000 (approximately 5%), and other payments outlined in Attachment A, with
remaining monies in rebates and tax credits; federal tax incentives of
approximately 30% of the overall cost, and approximately 65% of project costs
funded through incentives; trends for KWh production with panels compared to
current panels on the market and the potential for improved technologies and
prices, with prices having gone down dramatically from initial modules and
systems; current and future legislation and credits; and future incentives
reflected by decreased rates as well.
Further
discussion included the methodology stipulated for calculation in documents
per IRS guidelines for Newport Partners and municipal applications; City
decisions on purchasing the system at year 10 based on the fair market value
of the system; rationale that Newport Partners would not exercise their put
option at that time, with no economic incentive for their firm to stay in the
program beyond year 10 since all tax credits would be claimed by investors;
and purchase stipulations contained in the agreement addressing equity
investment rates with the system no longer having any value to Newport at
that time.
Vice
Chair Gjerdingen thanked Mr. Streier for his presentation and discussion.
Next
Steps
Mr.
Schwartz advised that representatives from Newport Partners recommended that
the City consider multiple applications and continue discussion on the
community solar aspect, with this proposal from Newport Partners representing
only one option, with another option for guaranteed power purchase with
someone else owning the system other than the City of Roseville. Over the
next month or two, Mr. Schwartz suggested that the PWETC can determine their
recommendation to the City Council to ensure applications can proceed in a
timely manner from the City Council’s decision and direction authorizing
moving forward.
At
the request of Mr. Schwartz, Mr. Streier reviewed the timing of an
application, suggesting several documents needed for the process, including
some on-site assessments of the building and a system layout drawing, and
shading report, which will take from two to four weeks depending on the weather,
and needed before the February 28th application deadline.
Chair
Stenlund asked for a risk assessment, or example of the risk to the City over
the ten to twenty years, especially the risk shared by the City after year
10.
Member
Wozniak asked for dollar figures from staff on what total amount the City
would be paying out in ten years.
Member
Seigler opined that, for the dollar asset with the City paying 30 cents for
every dollar, and someone else paying 70 cents, he didn’t think the City
could find a better deal anywhere for a $240,000 valued system, for which the
City would pay $60,000.
Member
Cihacek suggested examining the City’s options at year 10, as the system
owner at that point, and whether to convert it to a solar garden or find
another option for another system operator after that first ten years, based
on the current understanding and projected understanding of legislation.
Mr.
Schwartz noted that current projections were carried out on the spreadsheet
(Attachment A) based on the system becoming the City’s. It was noted that
any maintenance costs were not included, but were projected as minimal.
At
the request of Member Seigler, Mr. Streier advised that the escalation rates
used by their firm on the spreadsheet calculations were at 4%, the industry
standard, but could be lowered to 2% to project a worst case scenario.
Mr.
Schwartz advised that there remained many more eyes to look at this
projection, from the City Attorney to other experts in the area, including an
opportunity for the assistance from Mr. Brian Ross with Metro Certs, who was
now accepting applications for assistance in helping the City work through
these details. Mr. Schwartz advised that it was staff’s intent to work with
Metro Certs to evaluate the process.
Further
discussion ensued regarding timing for the PWETC making a recommendation to
the City Council; number of potential applications, with the City having
three different meters on the City Center campus; staff’s ongoing research
and analysis to provide to the PWETC and City Council; continued exploration
of community solar gardens and sale of subscriptions; and potential
partnership with Newport Partners in administering the project in Minnesota,
with their firm requiring additional due diligence before willing to enter
into a long-term administrative role depending on the City’s goals.
Mr.
Schwartz noted that, depending on how structured, if every subscriber was
considered an investor by the Securities and Exchange Commission, there may
be additional reporting required, thereby increasing administrative costs and
expertise.
7.
2015 Public Works Work Plan
Mr.
Culver reviewed the 2015 work plan, deferring longer-term projects, including
the MnDOT Highway 36 Bridge over Lexington Avenue for a future meeting,
allowing for additional materials and information to be received from MnDOT
before that presentation.
Mr.
Culver displayed the work plan detailed in the staff report and attached maps
and reviewed each area as indicated. Mr. Culver noted that the development
market was picking up, and he anticipated infill development that would not
require any public infrastructure improvements, in addition to those proposed
for newer development areas, including in the Twin Lakes Redevelopment Area.
Mr.
Culver reviewed Pavement Management Program (PMP) projects, consisting of the
Victoria Street reconstruction and its various components, with preliminary
designs available at a future PWETC meeting.
In
response to Member Lenz regarding the need for additional parking near
Reservoir Woods, Mr. Culver advised that staff was in discussions with the
Cemetery at this time for construction of a small parking area on the north
side of the cemetery; and if that could not be negotiated, he reported that
there may be further opportunities to do so on the west side of Victoria for
access to the trail/sidewalk amenity. Mr. Culver noted that the roadway
would need to be designed to a higher capacity due to Minnesota State Aid
(MSA) standards, and advised that staff would be working with MnDOT on minimum
widths to maintain a rural feel and reduce curb and gutter needs, and
maintain existing drainage systems with ditches in place.
Discussion
ensued regarding segments of Victoria Street; curb and gutter areas; areas of
significant erosion during wetter weather; and opportunities being pursued to
enhance stormwater management with this project.
Mr.
Culver reviewed PMP mill and overlay projects, including a joint project with
the City of Falcon Heights, and potential modifications that may be necessary
to stay within budget parameters; and some of the seal coating work
accelerated in response to delamination issues on some streets as well as
some mill and overlay projects to remove the poor top layer of pavement.
Mr.
Culver reviewed 2015 utility projects, including sanitary sewer lining and
watermain projects, with a major section of water main proposed for
replacement at Midland Hills Road to replace a section currently leaking.
At
the request of Member Seigler, Mr. Culver reviewed the process used to ensure
no sewer back-ups during lining projects, and notices to property owners
immediately prior to work being performed to avoid issues; with Mr. Schwartz
noting that a typical property was only affected for up to four hours while
the work was being performed.
Mr.
Culver reviewed anticipated storm sewer projects at Evergreen Park and Upper
Villa Park for a storm water retention and reuse system in conjunction with
the Parks Renewal Program, intended to address areas with historic drainage
issues, and coordinated with the 2015 PMP to identify potential project
areas.
Mr.
Culver noted that Environmental Specialist Ryan Johnson continued to identify
historic drainage problems for resolution.
Overall,
Mr. Culver advised that staff had identified up to an estimated $10 million
in total 2015 project costs, with the proposed extension of Twin Lakes
Parkway representing 30% of the cost; and funding provided for the projected
work through the municipal state aid account, water, sanitary sewer, and
stormwater utility funds, the street maintenance fund, and general fund seal
coat dollars; as well as special assessments for applicable properties on
Victoria Street.
Discussion
ensued related to development projects currently known of; and annual
projections for PMP projects and the annual work plan.
Mr.
Schwartz advised that the work plan annual costs typically ranged from $3
million to $5 million in the past, but noted that an interchange project was
not typically included, nor an improvement such as Twin Lakes Parkway. Mr.
Schwartz advised that the annual program is fully funded to the $4-5 million
dollar level, with a long-term need to upgrade over 300 to 400 miles of
underground piping and continuous pavement cycles.
At
the request of Member Cihacek, Mr. Schwartz confirmed that the work plan was
based on asset management program replacement and/or maintenance cycles.
At
the request of Member Gjerdingen, Mr. Culver reviewed the projected funding
for the Twin Lakes Parkway/35W interchange project, with 2013 estimated
construction costs at $1.5 million, with $1.2 million available in federal
funds, with the City expecting to be responsible for $600,000, including
consulting fees with their assignment yet to be determined.
Mr.
Schwartz noted that the Wal-Mart development project had already provided
$400,000 toward the cost of the project.
Mr.
Culver advised that a decision was needed in the very near future as federal
funding was set to expire by year-end 2015; and further advised that the
intent was to pay for any funding gap with tax increment financing (TIF)
dollars.
Further
discussion included pedestrian amenities in the Twin Lakes Parkway area and
immediate area to the north (Iona and County Road C-2 and Rosedale Center);
availability of preliminary plans from SRF Consulting for the PWETC’s review
for the Cleveland Avenue interchange and pedestrian facilities; effects on
wetlands in the area; and intent to complete links as development projects
trigger funding.
At
the request of Chair Stenlund, Mr. Culver addressed current Pavement
Condition Index (PCI) calculations and impacts of delamination issues; and
potential dedication of old street bonds being paid off this year and that
funding applied to the PMP to fill gaps.
8.
Projects Update including MnDOT Information
By
consensus, this discussion was moved to the November meeting.
9.
Possible Items for Next Meeting – November 25, 2014
·
Continue
Solar Energy Discussion
Discussion ensued regarding the
direction from the PWETC to the City Council on which system(s) to continue
considering and applications under the lottery system.
Mr. Schwartz advised that,
realistically, he didn’t foresee any time on the City Council’s agendas
before January of 2015, with only four remaining meetings in 2014 and given
their current projected agenda items.
PWETC members concurred that the
presentation numbers heard tonight sounded favorable, and indicated a good
investment for the City at 30 cents on every dollar; with consensus to
recommend three applications to be submitted based on the City Campus’s three
meters, depending on which plan to pursue.
Mr. Schwartz noted that there are
other solar developers as well as Newport Partners, and staff would continue
to seek additional information before recommending a selection, and based on
their financial models and type of solar modules.
·
Pathway
Plowing and Maintenance Discussion
Vice Chair Gjerdingen suggested a
review by the PWETC of current ordinances as well; with Member Seigler
suggesting those ordinances be included as an attachment to the staff report
in an effort to save time.
At the request of Vice Chair
Gjerdingen, Mr. Schwartz confirmed that someone from the Parks &
Recreation Department would attend the meeting for this discussion.
·
Traffic
Management Policy Request
Mr. Culver advised that staff had
received a neighborhood petition request seeking action on traffic speed,
volumes, etc; however, he advised that the petition, when sent out with
cost-share information, did not receive the required 65% residential
participation response needed to carry it forward.
·
Continue
Parking Requirement Discussion
·
TIF
Follow-up Information
Member Cihacek advised that this
could be provided by staff as an information item, since he was simply
looking for current TIF levels and funds available.
10.
Adjourn
Member Cihacek moved, Member
Stenlund seconded, adjournment of the meeting at approximately 8:57 p.m.
Ayes: 7
Nays: 0
Motion carried.
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