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Meeting
Minutes
Tuesday, November 25, 2014 at 6:30 p.m.
1.
Introduction / Call Roll
Chair Dwayne Stenlund called the
meeting to order at approximately 6:30 p.m. and Public Works Director
Schwartz called the roll.
Members
Present: Chair Dwayne Stenlund; Vice Chair Steve Gjerdingen; and Members
Brian Cihacek, Joe Wozniak, Joan Felice, Duane Seigler, with Member Sarah
Brodt Lenz arriving at approximately 6:31 p.m.
Staff
Present: Public Works Director Duane Schwartz and City Engineer
Marc Culver
2.
Public Comments
None.
3.
Approval of October 28, 2014 Meeting Minutes
Member Cihacek moved, Member
Felice seconded, approval of the October 28, 2014, meeting as presented.
Commissioner Brodt Lenz arrived at this time, approximately 6:31 p.m.
Corrections:
Members were asked to submit any
individual minor and/or typographical errors directly to staff unless of a
substantive nature for the Commission’s attention.
Ayes: 6
Nays: 0
Abstentions: 1 (Gjerdingen)
Motion carried.
4.
Communication Items
Mr. Schwartz and Mr. Culver each
briefly reviewed project updates and maintenance activities listed in the
staff report dated November 25, 2014.
Discussion included a history of
water main breaks in the community, trends, and decreases in breaks as new materials
and technologies are installed and/or used, with problem areas being
addressed on a priority basis; and the pending list of punch list items
remaining for completion in the spring of 2015 from the County Road B-2
project.
5.
Solar Energy Discussion, Continued
Mr. Schwartz introduced Patrick
Weir and Mike Kampmeyer of Sundial Solar, for their company’s presentation
entitled “Solar Options;” and their review of three available programs for
city solar installations: Made in Minnesota Rebates; Commercial Solar; and
Community Solar. Presentation materials were provided as a bench handout,
and attached hereto and made a part hereof.
Patrick Weir
During his portion of the
presentation, Mr. Weir reviewed the services provided by Sundial Solar,
including engineering, procurement and construction as part of their design
of solar projects, procurement of solar panels and inverters, and
construction by their team. Mr. Weir noted that their firm had completed approximately100
installations to-date; and reviewed the funding for those projects, available
through Xcel Energy.
At the request of Mr. Schwartz,
Mr. Weir advised that it was necessary for large scale-ground mount solar
arrays to be close in proximity to a substation; and that the typical size of
a community solar installation in the metropolitan area is approximately 2.5
acres.
Mike Kampmeyer
Mr. Kampmeyer reviewed various
options that the City of Roseville could consider for their benefits and
various financing considerations. Mr. Kampmeyer reviewed the advantages of
financing and partnerships with the St. Paul Port Authority (SPPA) with 100% financing
that would offset the energy produced with the loan payment, providing a
positive cash flow from day one of operations. Mr. Kampmeyer opined that the
SPPA program was easy to apply for with no out-of-pocket costs, but providing
a pass-through lease arrangements to take advantage of tax equity partners
and buy down of the system, with Sundial monitoring and maintaining the
system through an Operation and Management (O & M) Agreement, with the
entire program outlined in a proforma provided by Sundial as part of their
initial analysis and before agreements were put in place.
Discussion included production
efficiencies of the installation during the term of the contract and energy
costs; lifespan of the inverters; and warranties of each product and options
for a Made in Minnesota and/or Chinese manufactured panel and/or inverter;
and typical 15 year inverter replacement recommendation.
Further discussion included the
benefits and risks of ownership by the City; tax equity investor credits
through 2016 followed by accelerated depreciation; use of PACE funding for
the system’s construction costs; and typical prices for construction and
investor profit potential over time and paid by from revenues in comparison
to using an SPPA loan that would provide positive cash flow from the start.
Additional discussion included
minimal differences through any economies of scale; full ownership by the
City after 10 years of semi-annual payments to the SPPA; responsibility for
ownership of the hardware depending on which option was chosen; and
warranties for panels and inverters based on 100% production numbers and
typical degradation, estimating 80% production at 20 years.
Further discussion included
typical terms for power purchase agreements at 20 years to allow for
depreciation of equipment and a return on the investment, with a profit
typical at year 12 to 15; continued panel electrical production beyond their
expected lifespan of twenty-five years; and potential purchase of the
equipment at a nominal cost after the contract term expires providing
continuing operations.
Discussion ensued regarding the
manufacturers used by Sundial Solar; options for sizing the solar arrays
based on their construction costs and/or extra power produced; preference for
roof mounted installations versus ground mounts; and recognition of the
competitiveness and attractiveness of the SPPA financing, with consultation
sought by staff from the City’s Finance Director on his recommendations on
financing the system.
Mr. Schwartz noted that the City
Council had previously signed onto a Joint Powers Agreement (JPA) with the
St. Paul Port Authority to allow properties to access that money, as well as
other commercial entities.
Mr. Weir advised that the SPPA
would not authorize a project unless the analysis and proforma found the cash
flow to be positive.
At the request of Chair Stenlund,
Mr. Weir reviewed the possibility of new technologies and better solar panels
over time that may make a current installation obsolete or no longer cost
effective during that twenty-five year period. Mr. Weir advised that while
costs had come down considerably over the last few years, the current
investment tax credit being reduced from 30% to 10% over the next two years
would have more of an impact than changing technologies on solar panels. Mr.
Weir further noted that some companies were just now getting involved in
recycling of solar panels.
Discussion ensued regarding the
options to pay the City for use of their rooftops or solar installations and
how that was valued annually; the recycling of components of the solar
arrays; how and where solar arrays are connected to the rooftop without
penetrating the roofs and balanced by weights, typically around the perimeter
of the solar system; micro wiring for higher voltage based on 2014 NEC code
requirements for a shut-off, and more efficiencies and reliability of micro
inverters of low voltage; and risks for snow covered panels and subsequent
low output, with the dark panel color attracting the sun and melting snow to
bring them up to full production in short periods of time; with three months
of each year considered a “write off” due to the location of the sun, even
though Minnesota works quite well for solar power.
Further discussion included which
option was better: going through the lottery system with only one out of four
applications selected on average; or a straight loan from the SPPA for a two
page application form for PACE financing.
Mr. Kampmeyer advised that of the
44 applications they submitted last year, 22 were approved, which was higher
than normal; with the City of Golden Valley submitting 8-10 applications and
four approved; while other communities receiving no approvals. Mr. Kampmeyer
advised that the lottery system received 300 applications in 2014 with 106 of
varying sizes selected.
At the request of Chair Stenlund,
Mr. Kampmeyer advised that aisles for access of other equipment on the roof
were provided, with a typical 40 K system taking up 4,000 square feet in one
open area.
Mr. Schwartz noted that the City
had a number of buildings just on the city campus with roofs of varying
sizes, displayed by map (e.g. new fire station, skating center, city hall,
public works building, and police station) providing campus solar rooftop
space. Mr. Schwartz questioned if a Made in Minnesota 40 K project was
pursued, would it prohibit another type of project on another city facility’s
roof; since the City has up to six electric meters available at this time.
Mr. Weir responded that it would
not, with plenty of rooftop available; and noted the desire to install solar
arrays on newer rooftops, but some facilities of the size that could allow
both a 40K and a 100 K system on the same rooftop; and with six meters
available, should provide more flexibility as well.
Commissioners and/or staff sought
additional information, with Sundial representatives offering to provide that
information to staff for dissemination: which portions of the solar systems
are recyclable (e.g. racking and rails made of aluminum and silicon); and
whether one 40K per meter would impact any other meters, or simply mean
adding another meter.
At the request of Member
Gjerdingen, Mr. Kampmeyer advised that maintenance and operational responsibilities
would be outlined and built into a contract.
Mr. Kampmeyer reviewed typical
moving of panels and the system if required with any unforeseen repairs for a
roof, with the panels coming apart and picked up for assembly or disassembly
as the case may be; with the preference for installations on rooftops that
are less than 5-7 years old to avoid that potential.
With concerns raised by Member
Gjerdingen regarding building maintenance and/or expansion, Member Cihacek
noted that, with a twenty year agreement for the solar installation, any
substantial changes to that particular building would most likely not be
anticipated until the end of that contractual agreement; with costs for
moving panels and/or down time also negotiated as part of the fixed price for
the twenty-year agreement period.
At the request of Member Cihacek,
Mr. Kampmeyer reviewed energy cost assumptions including annual inflation;
but depending on how much of an increase was granted by the Public Utilities
Commission (PUC) to Xcel Energy during that time. Mr. Kampmeyer noted the
current dramatic drop in natural gas, and potential increases in the future
as Xcel Energy was regulated to shutter coal plants and/or decommission
nuclear plant and associated costs. Mr. Kampmeyer noted that Minnesota currently
had low energy costs due to coal energy, and average annual increases of
approximately 4.3% over the last ten years.
Mr. Weir anticipated a realistic
3.5% annual increase form Xcel Energy over the next twenty years, with a 2%
escalator built in.
At the request of Member Cihacek,
Mr. Kampmeyer confirmed that the purchase price of the system was negotiable
depending on the system cost and available investors; but was typically low
risk for municipal governments from their past experience in these
negotiations.
At the request of Chair Stenlund,
Mr. Kampmeyer advised that their firm would not charge for designing the
system and was part of their services provided; and was available to offer a
proforma if the City chose to own the system and depending on financing
through the SPPA, inflation and degradation over time of the system. Mr. Kampmeyer
offered to provide information for the Commission and City to make an
informed decision.
At the request of Chair Stenlund,
Mr. Schwartz provided suggestions for moving forward. Mr. Schwartz advised
that, on a dual track, staff was seeking a recommendation from the PWETC to
the City Council in preparation for their January meeting, and anticipating
that work would continue at that same time if a decision was made to pursue
the Made in Minnesota application due in February and allowing enough lead
time to work out remaining details; as well as continuing to discuss programs
for larger roof areas. Mr. Schwartz advised that staff felt applications were
feasible on smaller roofs on campus to pursue other programs as well.
At the request of Member Cihacek,
Mr. Schwartz advised that staff did not see any need to pursue a competitive
bidding process under Minnesota municipal contracting laws for smaller systems,
but to simply negotiate with installers and financial partners.
At the request of Member Cihacek,
Mr. Schwartz suggesting, from staff’s perspective, to pursue an initial
project that was not too large, but given the amount of available roof space,
get several applications in for the Made in Minnesota program; and consider
one larger system for the SPPA program, if that was what the PWETC would also
support.
Member Cihacek spoke in support
of pursuing a solar power purchase agreement, based on the information
provided, but also providing an opportunity for public comment and firm
analysis on cost versus savings, and clarification for whether or not the
City should purchase the solar system. Member Cihacek suggested a
recommendation to the City Council from the PWETC to initiate a solicitation
process for a power purchase agreement for selected sites.
Mr. Culver, in questioning the
recommended size of the initial system from the PWETC, noted that a system of
100 K could take up to 10,000 to 12,000 square feet of rooftop; and expressed
concern about finding a roof or combination thereof that would provide that
space. Mr. Culver also suggested the need to define whether it was best to
pursue financing or seek a direct purchase by the City.
Mr. Kampmeyer addressed capacity
credits; noting that a 100 K system allowed the City to collect almost up to
50% of the solar capacity credit through distributive generation.
Mr. Culver noted that, based on
previous discussions specific to maintenance, if the solar system was
installed on a rooftop twice the size needed (e.g. 12,000 square feet size
for a 100 plus K system), that could be accomplished on the City Hall roof or
the side most recently refurbished; and then could be installed as necessary
on another portion or on a portion of the public works garage. Mr. Culver
opined that this should address concerns brought up about the power purchase
agreement and entering into a preset escalator or rate increase not knowing
what the market was going to do, and given the size of the proposed large
system on city facility rooftops.
After numerous presentations and
discussions, Member Cihacek opined that the best long-term savings option
seemed to be through a power purchase agreement with escalating amounts,
which would include some risks, but also provide some guarantees for at least
twenty years. While he had no preference in any options presented, Member
Cihacek opined that the PWETC recommend that the City Council use its
discretion to pursue an alternative measure to provide that best long-term
savings availability; and from a valuation standpoint opined that that may
prove the best option presented to-date, and allow initiation of the steps to
begin the process.
Member Seigler suggested
specifying the Made in Minnesota option, and proceed with that on six
different sites.
Mr. Schwartz questioned if the
City was successful in applications on two sites that were on larger roofs,
would it lose some opportunity or be allowed to swap roofs after selected.
Mr. Kampmeyer advised that he was
unsure of that result, and was also not sure how the process may work and
whether or not the City may lose its place and the award drop to the next
candidate.
Mr. Schwartz noted the need to
consider how best to maximize the opportunity of available roof space to some
extent.
Further discussion ensued
regarding roof and system capacity; cost of panels and available tax credits;
structure of a capital lease since the municipality would be unable to
qualify for tax credits; purchase of the system outright versus seeking
investors able to take advantage of those tax credits and thereby reduce
overall costs; and options for the City to lease the system from Sundial
Solar and buy it back after expiration of the tax credits expire and end of
the direct purchase agreement after 30 years; and how the City could achieve
its best return on investment, with the representatives offering to provide a
proforma on both options versus a loan.
Additional discussion included
indicating that the City had no money specifically targeted for solar, with
some monies included in energy budgets that was already operationally
budgeted and most likely used for this type of a buy back.
Mr. Schwartz opined that a
twenty-year agreement would provide the City with a significant payback period,
anticipating it would supply 1/3 of the power used on some buildings.
Member Cihacek moved, Member
Felice seconded, recommending staff to recommend to the City Council that
they initiate the process and associated analyses and solicit proposals and
proformas for comparison purposes, for a three part solar system to
investigate three programs: Made in Minnesota, a Power Purchase Agreement,
and a 100 KW Direct Purchase Solar system; and to pursue those programs in accordance
with Minnesota Statutes, Chapter 471, and related requirements; with the
purpose of determining which option offers the best financial return to the
City.
Member Seigler suggested further
refining the recommendation; with Member Cihacek clarifying that those
details would be addressed in the process and analysis.
Mr. Schwartz advised that staff
would most likely wait for the City Council’s authorization before starting
any of the processes, even though as noted by Member Cihacek, time is of the
essence.
Discussion ensued regarding
funding options; with Mr. Schwartz recommending that the City Council make
that decision; with staff to consider minimum and maximum sizes to consider
per rooftop, and provide costs on various inverters and products, with the
PWETC leaning toward those locally made inverters and/or panels.
Ayes: 7
Nays: 0
Motion carried.
Member Cihacek asked that staff
include solar updates as a future agenda item, which was duly noted by Mr.
Culver.
Chair Stenlund thanked
representatives of Sundial Solar; and asked that the responses to questions
raised during tonight’s discussion be provided to staff for dissemination to
the PWETC.
Recess
Chair Stenlund recessed the meeting at approximately 7:46
p.m. and reconvened at approximately 7:52 p.m.
6.
Upcoming MnDOT Project Information
City Engineer Marc Culver
presented information on 2015 MnDOT Construction projects, specifically those
impacting Roseville and its residents (Attachment A).
In response to a question by
Member Cihacek, Mr. Culver advised that MnDOT representatives had made this
presentation to the City Council in October, and while they could have been
asked to attend the PWETC meeting, staff felt they could provide the information.
Member Cihacek asked that, in the
future, a MnDOT be present to respond to questions of the PWETC, with that
request duly noted by staff.
Mr. Culver provided information
on various Ramsey County and MnDOT projects, including bridge replacements, and
potential road closures and/or detours. Mr. Culver addressed the Snelling
Avenue project in detail and impacts it would have on Roseville residents,
due to resurfacing south of the Minnesota State Fairgrounds and re-decking
the bridge over I-94; with some minor impacts already due to advance utility
work. Mr. Culver noted the need to work around the State Fair dates, but
anticipated traffic back-ups throughout the Snelling Avenue corridor during
the major portion of the work.
Mr. Culver noted that the current
road systems in the NE Metro were already running at or over capacity, and
when one route was lost it put strains on the remaining routes.
Mr. Culver highlighted the
Highway 36 bridge replacement over Lexington Avenue in Roseville, with
Roseville staff working with MnDOT on some final design decisions before
those plans were presented for municipal approvals as applicable. Mr. Culver
reviewed sidewalk connections as part of the project and to improve safety.
Discussion ensued among PWETC
members on the best way to extend the existing pathway to facilitate a safe
crossing point and to address future vehicular capacity and pedestrian needs,
but limited to available rights-of-way; bike lanes and/or sidewalk
preferences; and MnDOT’s intent to keep curb lines located as is with a
barrier curb under the bridge to separate vehicular and pedestrian traffic.
Mr. Culver noted the complaints
fielded by staff from that neighborhood about their ability as pedestrians to
connect to the high school and points north, as well as crossing Lexington
Avenue, especially at County Road B. Mr. Culver noted several options to get
pedestrians to a cross street and then allow them to navigate internal
streets to move in the area and off major streets and intersections. Mr.
Culver confirmed that traffic management devices are intended in that area as
part of providing safe crossings for pedestrians.
Mr. Schwartz noted the potential
conflicts at three traffic signals along that stretch that always created a
challenge for pedestrians; with staff noting the need to get kids to high
school as pedestrians or bicyclers, not just driving in vehicles.
At the request of Member Lenz,
Mr. Culver addressed the rationale in not providing a phased left turn lane
and signal arrow due to the geometry and width of the roadway as well as from
a capacity standpoint, necessitating the shared lane, which did create some inefficiency.
Mr. Culver advised the PWETC and
listening audience that during the staging of the Highway 36/Lexington Avenue
Bridge phasing, public information would be provided notifying businesses and
residents of the specific areas scheduled for construction. Mr. Culver noted
that the intent of MnDOT was for a two-construction season staging project,
but Roseville staff negotiated it as a one-season construction project to get
it completed and hopefully limit long-term impacts.
Discussion ensued on the
rerouting of traffic up and down ramps.
At the request of Member Cihacek
regarding ongoing and continuous closure of north/south arterials in the area
and whether there were any steps the City could take for proactive mitigation
of those traffic issues in the area even though they were not city roads, Mr.
Schwartz advised that staff continued to talk with MnDOT about the impacts of
those area projects and the need to still move people. Mr. Schwartz advised
that staff continued to seek MnDOT’s cooperation in scheduling alternative
routes.
Member Cihacek noted that the
projects must also negatively impact Metro Transit requiring them to
continually adjust their bus routes; and suggested a synergistic approach to
move people based on population routes.
Mr. Schwartz noted that Metro
Transit is invited to the meetings, and they hopefully would work out the
details for routes and timing.
In response to Member comments on
the Snelling Avenue Bus Rapid Transit (BRT) route, Mr. Culver advised that
the BRT was planned for late 2015, and the Snelling Avenue/I-94 Bridge should
be open by then, with the projects being coordinated simultaneously.
Chair Stenlund thanked staff for
the update.
Chair – thanked for update
7.
Discuss Next Meeting Date
At the request of Chair Stenlund,
Mr. Schwartz noted the short time period from this meeting to the Christmas
holidays, and current staff work load as they are in the height of the 2015
project development. Therefore, from staff’s perspective, Mr. Schwartz
advised that it would be difficult for staff to develop additional new topics
between now and then; and suggested those agenda items be deferred to the
January 27, 2015 meeting of the PWETC.
Member Cihacek moved, Member Lenz
seconded, cancelling the December PWETC meeting.
Ayes: 7
Nays: 0
Motion carried.
Member
Lenz advised that she would not be able to attend the January 2015 meeting due
to a previous commitment.
Suggested
Future Agenda Items
Discussion
ensued briefly regarding the timing of the solar applications and ability of
staff to provide an update in January and meet the end of February deadlines
for submission.
Mr.
Schwartz advised that the Parks & Recreation staff, scheduled to meet
jointly with the PWETC to discuss pathway maintenance issues, had asked to
defer meeting until the January meeting due to the grand opening of some of
their park facilities during December.
Member
Cihacek reminded staff of his previous request for tax increment fund balance
information, with Mr. Schwartz responding that he was working with Finance
Director Miller and anticipated that information and/or presentation in
January as well.
Mr.
Schwartz advised that staff was in the process of developing the design plans
for the Victoria Street project for 2015, and would present those preliminary
plans to the PWETC in the very near future as well.
8.
Adjourn
Member Cihacek moved, Member Gjerdingen
seconded, adjournment of the meeting at approximately 8:32 p.m.
Ayes: 7
Nays: 0
Motion carried.
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