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HomeMy WebLinkAbout2007-12-17 Finance Committee Minutes FINANCE COMMITTEE Monday, December 17, 2007 Minutes Councilors in attendance: Stone, Palmer, Blanchette, Hawes, D’Errico, Farrington Staff in attendance: Cyr, Barrett, Wardwell, Warren Others: Bob Marcote, Jim Lucy, Greg Young, Dawn Gagnon 1. Consent Agenda a. Ratification of Quitclaim Deed – 53 Charles St – Norumbega Venture Company 2. Bids/Purchasing a. Runway Deicer – Airport – Old World Industries - $95,700 (est) Blanchette asked if these costs are passed on to the airlines. Cyr said there is a specific airplane deicer but to take care of the runway is part of the Airport’s fixed costs. D’Errico said one of the costs included in the calculation of landing fees includes maintenance of the runway. Responding to Blanchette, Barrett said that Hupp had recently completed an analysis of comparable airports and Bangor was at the low end of fees charged to airlines. It was $3.06 per passenger. Responding to Blanchette’s question, he anticipates that LAX’s landing fees would be significantly higher. Blanchette asked what is being offered that warrants a higher landing fee. Barrett said there is a higher demand for runway space at LAX as well as a higher overhead operating cost. Palmer said that airplane deicer is a safety necessity. A motion was made and seconded to approve staff recommendation. b. Request to Waive Bid Process – Public Works – Traffic Controllers – Ocean State Signal Co - $40,800 Cyr said this is a request to waive the bid process to purchase three traffic controllers to be used on Main Street between Cedar and Dutton Streets. This is a BACTS project which usually ranges between 80% and 90% State funding. Responding to Gratwick, Wardwell said that the City has narrowed the process down to two brand name controller systems (Eagle and Econolite) and tries to replace them by corridor basis. Broadway and Stillwater corridors have been done. Gratwick asked about a policy that would integrate all controller systems. He asked if there are universal standards in the industry. Ring said there are a number of manufacturers and suppliers. Up until a few years ago, the City did not have control over controllers used and installed by the State of Maine. Responding to Palmer, Wardwell said the City maintains 110 signals or so. Barrett spoke about the future need to start training employees to work on these signals. Currently, the employees are relatively long-term and closer to retirement. Blanchette asks what standard the City uses to synchronize lights to coincide with speed limits. Ring said any signal timing involving progression between signals must be approved by the State. Blanchette specifically asked about Drew Lane and Stillwater Avenue. Ring said that site is part of a integrated system on Stillwater Avenue. Barrett said that a right turn on red can ‘confuse’ a signal. When lights are installed to control traffic, the City needs to be sensitive as to the number of unnecessary stops and starts that citizens are made to make. She spoke about carbon emissions. Barrett said that Bangor was one of the first cities in the state to use overhead detection units. Tying signals together in corridors, moves traffic more smoothly with fewer stops. It’s not always 100% possible because of the nature of the street system. Traffic patterns change based on time of day and time of year. A motion was made and seconded to approve staff recommendation. 3. Review of Honeywell Energy Audit – General Fund Facilities Cyr introduced Jim Lucy and Bob Marcote from Honeywell. The City engaged Honeywell last year to perform energy audits of all City facilities. Due to its complexity, staff and Honeywell chose to break the audit into four separate groupings. Tonight’s focus will be on the general fund facilities. The other groupings are the airport, wastewater treatment plant, and school facilities and Honeywell’s recommendations of the latter three should be available in January or February of 2008. The sites included in this report are the Parks and Recreation Armory building, Bass Park, Central Fire, City Hall, Fire Station 6, Fleet Maintenance, the Club House at Golf Course, Health and Welfare, Public Works, Mansfield Stadium, Recycling, BAT Area, Park Woods, Sawyer Arena, Union Street Athletic Complex, and the Standpipe. Honeywell compiled a list of 135 projects detailing costs, energy savings, and costs associated with each recommendation. Cyr, Barrett and Honeywell representatives have reviewed the entire list. Staff is recommending 62 projects to be undertaken at a total cost of $1,223,000 . Based upon the energy audit completed by Honeywell, it is estimated that these projects will produce annual savings of $153,000 in utility costs, which is sufficient to cover finance of these improvements over the next 10 years. The $153,000 would be an annual budgeted item. Cyr said the City would breakeven for the first ten years and after that the utility costs would drop. With the projects being suggested for implementation, the City would save overall energy costs by 13%, kilowatt charges would be reduced by 13%, oil and LP gas consumption would be reduced by 16.8%. Blanchette asked about the Bass Park/Auditorium/Civic Center and questioned the payback value in light of the future auditorium. Cyr said that Honeywell did look at the facility but staff is not recommending any money be put into the site. Responding to Farrington, Cyr said the $1.2M is not a budgeted amount. The City budgets annually for utility costs. From an environmental standpoint, the City will reduce its environmental footprint, which is an additional benefit. Gratwick said essentially Honeywell is lending $1.2M and the City will be paying it back at $153,000/annually. Barrett said Honeywell is guaranteeing the savings. If the savings come in less, Honeywell will be required to make up the difference. Most likely the actual savings will be higher than those being projected. Palmer asked if any of the auditorium projects would impact life-safety of attendees at the facility. Barrett said no and stressed that no projects will be undertaken at the site. Palmer said he understands no projects will be undertaken there but he wanted to make certain nothing was being missed. He didn’t want to see any money being put into that site. He mentioned that perhaps Honeywell could assist in the design of a new facility for energy saving purposes. Palmer asked about the standpipe ownership. Barrett said the standpipe is owned by Bangor Water District but the City has historically paid the electric utility costs and maintained the lighting system on the top. Barrett said he would research it. Instead of researching, Palmer asked the City Manager to contact the Director of Bangor Water District. Palmer talked about color lights on the standpipe. A sample of LED lights for the standpipe was available for the Committee. Palmer asked that it be provided to the Bangor Water District’s Director. Responding to Stone regarding maintenance, Lucy has discussed this with staff. At this point because he is not completely sure of the four different sections of the City and what mix of equipment might change, Honeywell hasn’t reached a final decision. The $1.2 and the $153,000 are not part of maintenance. Lucy said when modernizing assets (lights, controls, water conservation) there will be in impact in terms of operating costs. Over time, it will be felt. He classified them as a soft savings. From a true operations and maintenance standpoint around heating systems, lights and controls, lights have a typical warranty from lamps and balasts, it would probably be handled by the City to keep the cost down. Regarding HVAC, similar to how maintenance is handled at BIA, there have been discussions with administration to have Honeywell look at a citywide contract to maintain heating systems and control systems associated with the project. Costs have not been determined at this time. Barrett said with what has been proposed to go forward with, the City is not proposing to use all of the savings to pay debt service so there is room within savings to add additional maintenance costs. The City has asked Honeywell for a cost estimate to maintain certain of the City’s systems at a certain level. It would either replace some existing maintenance contracts or would provide maintenance to facilities that are currently being under-maintained. The process showed the City may be doing a generally good job at maintaining its boilers but not at maintaining ventilation systems. These will all be reviewed before entering into the final contract. The savings can support the greater expenditures than what is presented even on a ten-year period. Lucy said the $153,000 doesn’t account for the existing maintenance expenditures. The idea is to analyze the current costs, the activities being performed for the costs, and how Honeywell proposes something that does the proactive services at the right blend and the right cost. Lucy narrated a slide presentation and reviewed an executive summary of the recommendation options. He also distributed copies to the Committee. It also contains details of what was not recommended. Lucy said they looked at 40 different locations and have broken them down into four sections. Honeywell had met earlier in the day with the WWTP and Lucy said this is the project they are the furthest along with. They are looking at energy efficiency, building comfort, proper ventilation. They provided a listing of the buildings reviewed. Lucy said their first step in this project was to measure the baseline and many things went into that consideration: weather, heating degree days, three years of overall billing. He noted that the City has been very proactive in energy efficiency. Critical considerations are: what is the weather, what are you spending today and what is the usage of the building. Day logging devices have been installed in City buildings to fully understand the operating conditions. Responding to a Councilor, Lucy said there have been a half dozen Honeywell employees involved in this project thus far, there have been some subcontractors. Lucy said the City is at approximately $3.7M per year in energy costs for the buildings still considered in the audit. The challenge for the review of the auditorium was that the City Manager had asked Honeywell to review things that are five years or less. There are certainly ways to save money at the auditorium but not worth spending the money due to the future of the facility. Lucy talked about various measures: building envelope which deals with weather-stripping, caulking, accessible insulation, roof and wall joints; temperature control improvements and Honeywell is introducing direct digital control systems such is as BIA and the new police department facility. Lucy said this was more at the boiler level rather than individual room control. Water conservation is recommended in a variety of buildings replacing toilets with low flow units, upgrading sinks with lower flow retrofits. Light retrofitting to look for ways to use technology to improve the overall lighting. Honeywell has worked with Bangor Gas looking, where feasible, to extend natural gas service to City buildings. Honeywell’s proposal is to run natural gas with the assistance of Bangor Gas to a majority of the City building sites. Oil burning capability would still be in place. Gas or oil - whatever is cost efficient at the time. Where gas is not recommended, Lucy recommends fuel oil pre-heaters. Steam trap replacement is recommended. It is a maintenance item and also an energy waste item. This is particularly true of City Hall. Honeywell recommends a new boiler for City Hall. There currently is one and a back up is recommended. He spoke of de-stratification fans known as a paddle fan in ceilings. Honeywell is working with the City Information Services Department to put power management control in place for desk top computers. Lucy spoke of a mix of on-going support services measuring and verifying project results. Lucy said it is not just the initial costs but one needs to look at the overall lifecycle costs of maintaining the assets. He spoke about the revenues and costs of the recommended options. For the given scope of work, there will be no change orders. Interest is calculated at $300,000 making the total at $1.5M total cost. Total project revenue is approximately $1,829,000. Regarding cost neutral, Lucy said it is an accurate statement with the exception they look to develop a base line of the current state. Historically, costs are rising. A good way to look at this project is not cost savings but cost avoidance. As the number of units of energy used is reduced, the impact of those increases is going to be less each year and thus your cost avoidance is going to be greater. Palmer is concerned about who is paying for the standpipe lighting. Because of its historic nature, the lighting from the balcony should not be played with. Changing it to LED lighting might not be seen favorably from the citizenry. He agrees with dual fuel options and natural gas. He is concerned about the appearance of natural gas meters. Blanchette asked what is causing the City to use so much energy at the Health and Community Services Department. Barrett said the number used is for the entire building which includes the Bangor Nursing and Rehab Center and other tenants. The BNRC is currently undergoing some projects to improve their energy efficiency. The building requires a higher temperature than you might prefer in standard office building given the age of patients and state requirements. Blanchette asked about the rental of Sawyer Arena. She asked if the cost of energy is factored into the rental fee structure. Barrett said the prices are restructured annually and generally slightly exceed the Arena’s operating cost annually. Gratwick asked about the local payback projections on some sites. In some instances, Barrett said the fuel oil heater at some of the buildings, because of the option of dual use, going primarily to natural gas. Gratwick asked if there is a move away from individual electric heaters in City buildings. Lucy said that building envelope is one of their areas of concern which deals with making office environments comfortable by sealing up around windows, doors, etc. which will address temperature complaint. Two city buildings have electric radiators and Honeywell has looked at replacing them with hot water radiators. The installation cost for a change over is expensive and the payback doesn’t come within a ten-year period. Barrett said that various City Hall employees do use electric heaters because of being uncomfortable. To significantly solve that problem at City Hall would take a complete redo of the entire building. At one point, the estimate was $800,000 with a savings payback of 38 years. Barrett said he wasn’t certain if the carbon footprint from oil heat isn’t higher from the carbon footprint of electric heat. Gratwick asked if local contractors will be used for Honeywell’s proposed project. Lucy said they will do a good chunk of the work themselves and their intent is to use as many local contractors as possible. Lucy said he would seek the City’s input on contractors. Stone asked Barrett if the City is capable of administering temperature control in buildings. Barrett said it is not recommended at this time because when looking at City Buildings the payback of going to a direct centralized digital control system was a lengthy timeframe of 50+ years. He said it would be revisited once the work on all City facilities is completed. The City does have a capability of a centralized controlling system out of City Hall through its fiber network. He is not convinced that it will provide a reasonable payback. Cyr said there are night setbacks recommended. There is a base level included in the proposal. Barrett said the City will be moving toward room occupancy sensors for lighting because individuals don’t always remember to turn off lights. Stone talked about the Airport terminal. Barrett said he hasn’t yet seen what is being recommended by Honeywell for BIA. The City is just starting to gear up for the design phase of the terminal expansion. Stone asked the interest rate for the payback. Lucy said is 4.09%. Stone questioned the recommended new boiler for City Hall. One boiler would run off fuel oil and one off natural gas, Barrett said. Marcote said one of the driving forces for the recommendation was because of the significance of the building and its activities in the event of a power outage. This building originally had two boilers. Stone asked how a payback is calculated on something that might never be used. Marcote said it was more of an infrastructure to maintain the building’s operation in the event of a catastrophe. Cyr said it doesn’t pay for itself. Stone asked about propane vs. natural gas and associated taxes. Lucy said the City is tax exempt. Stone said it was transportation taxes and asked that it be taken into consideration. Marcote said propane is far more expensive than natural gas. Responding to Stone, Lucy said that aesthetically if Honeywell replaces a ceiling tile, for example, it would be responsible to match it to what is currently in place. As an example, Barrett said it was taken into account when looking at the various projects that if lighting in the council chambers needed to be replaced that ceiling tiles would be replaced as well. Gratwick asked if City personnel will be training to deal with the upgrade and upkeep. Barrett said it is going to depend on which part of the City is being looked at. For example, at BIA there are electricians who are licensed in certain areas. In other parts, there are not that type of employees in place. As to what to do with the money saved per Councilor Stone’s question, Barrett said it becomes a decision for the Council in the annual budget process. Gratwick asked if this is an on-going process whereby in a set number of years another review would be undertaken. Lucy said in many cases they have implemented multiple phases. Honeywell would like to establish a long-term relationship with the City. Lucy said they usually provide an annual report and then at the request of the City they could provide year to date updates. Barrett spoke about the City’s future plans to change street lights to LED lights and that all new construction and major projects for the City would be LEED certified. Palmer asked about the Bangor Public Library. It has a severe energy problem. Lucy said it was initially discussed but never heard back about performing an audit. Barrett said the offer will be made again. Palmer spoke about the former derelict police department structure that houses a boiler that is less than ten years old. Lucy said one area being considered for this particular boiler is the airport domestic terminal. Cyr said the boiler in question is a one-piece cast iron unit. Stone asked how Honeywell is compensated on this project. Honeywell and the City agreed upfront to open book pricing. Lucy said there is a pre-agreed upon profit and mark-up and an open book model where the mark up structure is disclosed. There are certain overhead costs at 13% and profit at 10%. Lucy is the project leader and is a salaried employee. In terms of standpipe lighting, Barrett said there are two things. Standpipe lighting and standpipe wiring upgrades. Lighting indicates savings of roughly $1,600 against a cost of $4,400. In looking at this, Honeywell identified that the condition of the wiring on the standpipe is exceptionally poor. Even if the light bulbs are not replaced, it needs to be rewired. Lucy introduced Greg Young, a member of the team who is focused on lighting improvements. Young provided information on his inspection of the standpipe. He also provided a demonstration of LED lighting options showing the difference between what is currently in place and what is available. Palmer suggested that various options be tried and that individuals view the standpipe from miles away to see how it looks. Blanchette said when you give the public an opportunity to complain they will take more than advantage of it. If all lights were changed, the public would not notice but if you put in various type of bulbs it will show the comparison. Palmer disagreed. In the interest of time, Stone suggested that the standpipe be discussed in further detail at a later time. Barrett said he is asking the Council at the moment to go forward with the projects identified to date and is recommended and to take those projects and work with Honeywell and sign a contract to get this underway. A motion was made and seconded to approve staff’s recommendation. Someone from the public asked a question but was not speaking into a microphone. Lucy said it had been discussed with an analysis and suggested talking after the meeting. Gratwick made further comments but was not speaking into a microphone. Barrett said he would be more than happy to come back to discuss further questions at any time. Change orders can be entered into after a contract is in place. Blanchette said she is concerned about the school buildings and their inefficiency use of energy. She said that mass changes are needed. 4. Executive Session – Hardship Abatement – 36 MRSA § 841 (2) A motion was made and seconded to move into executive session. 5. Open Session – Hardship Abatement Decision A motion was made and seconded to approve staff’s recommendation.