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HomeMy WebLinkAboutCapital Program Committee Minutes - 11 08 2011_201402121340306943Minutes for November 8, 2011, adopted Nov. 29 Page 1 of 7 Town of Nantucket Capital Program Committee www.nantucket-ma.gov MINUTES Tuesday, November 8, 2011 4 Fairgrounds Road, Second-floor Meeting Room – 9:00 am All or a portion of this meeting is being recorded. If you plan to record this meeting yourself, please check with the chairman of the board before you begin. Called to order at 9:00 a.m. Staff: Diane O'Neil Attending Members: Peter Hoey, John Tiffany, Peter Boynton, Linda Williams, Phil Stambaugh Absent Members: Patty Roggeveen, Carol Dunton Late arrival times: Williams 9:42 a.m. Early departure: Williams 11:06 a.m. I. ADMINISTRATIVE BUSINESS 1. Approval Minutes – November 1, 2011 Sitting Hoey, Tiffany, Roggeveen, Boynton, Stambaugh Presentation N/A Discussion Hoey – There are some corrections submitted after 4 p.m. Nov. 7 that need to be included. Action Waived approval for Nov 15 2. Rate sheet deadline Sitting Hoey, Tiffany, Roggeveen, Boynton, , Stambaugh Presentation O’Neil – Rate sheets need to be in by Monday Noon Discussion Hoey – Is next week going to be a voting week or additional presentation, because Energy Study Committee needs more time? It is unlikely we are going to reach conclusions. Meet to vote on Nov. 29. Action Post voting meeting for Nov. 29 and Nov 15 to be used for further presentation. II. NANTUCKET PUBLIC SCHOOL 1. Nantucket Public Schools Infrastructure Upgrade - $60K Sitting Hoey, Tiffany, Roggeveen, Boynton, Williams, Dunton, Stambaugh Presentation Dave Kanyock, School Facilities Director – Switches do not provide Power over Ethernet. Equipment will include 17 24 to 48 port gigabyte switches at $3530.00 each. Glenn Field, School Finance Director Discussion Tiffany – Where did the $3530.00 come from? Kanyock – Quote from technology people got from the supplier. 2. Nantucket Elementary School Roof replacement - $140K Sitting Hoey, Tiffany, Boynton, Stambaugh Presentation Kanyock Built in 1987 and no roof replacement since. This is based on verbal contract – 30-year Architectural shingles, venting, gutters and downspouts. Discussion None Minutes for November 8, 2011, adopted Nov. 29 Page 2 of 7 3. Nantucket elementary School Classroom Upgrades - $200K Sitting Hoey, Tiffany, Boynton, Stambaugh Presentation Kanyock – To replace worn carpeting with vinyl system $125K per room. When built, slab did not include any moisture barrier of any kind. That needs to be done at this time. Have 9 rooms that have priority. Discussion Hoey – We have over $12M in requests and need to start paring it down. Can it be spread out over two or three years? Kanyock – Yes, Field – We are at max capacity in all rooms. Have complaints of mold and moisture smell in class rooms. If we spread this out do we incur an liability? Would we need to displace classes into mobile classrooms? Kanyock – No. we do not have to re-locate classes if we spread this out. Tiffany – You say 9 but the paperwork says 10. These are out of how many? Kanyock – They are all the rooms on that side. Some are very small. $200K is all right. Tiffany – This is in fact all elementary school rooms. Kanyock – Yes. The entire school was built without a moisture barrier. Gutters and drywalls will help a lot. It is the system we used on the cafeteria two years ago and works very well. 4. Cyrus Peirce Middle/Nantucket High Schools Classroom upgrades - $225K Sitting Hoey, Tiffany, Boynton, Stambaugh Presentation Kanyock – Can replace the carpeting with vinyl and do it during the summer. Don’t have the moisture problem. Areas include lower level high school classrooms at about $100K, refurbish walls and floors in the high school men’s and women’s showers estimated at $40K; this is a system similar to being done at Nantucket Yacht Club. Upgrade Cyrus Peirce classrooms 8, 9, 10 & 17 at about $30K. And start replacing student lockers in the middle school and high school made from recycled plastic; price to be determined. Discussion Hoey – You can prioritize this as well? Kanyock – Would like to do lower level of HS first. 5. Cyrus Peirce Middle School Fire Alarm Upgrade - $50K Sitting Hoey, Tiffany, Boynton, Stambaugh Presentation Kanyock – Addressable smoke alarms. Could not get replacement parts. Have replaced alarms in ducts with addressable. Make all the detectors and “pulls” addressable is the last piece of this project. Discussion Hoey – would like the minutes to reflect the key safety point is this system is the last of the zone that allows firemen to go directly to the problem area. Minutes for November 8, 2011, adopted Nov. 29 Page 3 of 7 6. Nantucket High School Auditorium Upgrades - $200K Sitting Hoey, Tiffany, Boynton, Stambaugh Presentation Kanyock – Installing air condition (A/C) is estimated $150K . Got the quote Thursday of last week. Stage floor, lighting and curtains repaired replaced . Floor will be at least $20K, curtains about $7K Discussion Stambaugh – This is a very visible location used not only by the school but also the public. O’Neil – Isn’t it a revenue source for the school? Kanyock – Yes it is. Make about $20K a year. Hoey – Best estimate of incremental revenue? Kanyock – Can double it with A/C or see another $5K or $10K a year. Revamped our rates this past year. Boynton – What do you charge? Kanyock – Full day rental, a “C” which is for profit $1500 to $1700. We get about $400 an hour for a minimum of three hours. Anything over three hours, you have to rent it for a day. Field – We are looking at being a low-cost provided. We are not in a profit mode at all; but we would like to break even to begin with. Hoey – Would a ten year payback on incremental be ok Tiffany – Do a leverage payback. Because the $200K spent if borrowed it needs to be added in as a cost. Field – Our leverage to get up to 30/32K in gross receipt level is based on where else are they going to go in July and August. Tiffany – Like to have hard objectives so that focus becomes keener on how to market how to do this, some kind of paperwork; so that we ensure you get some kind of payback. Looking at a payback has to depends on the life you’re putting into it. If you have a 10-year life; you have a 10-year payback. On average, you broke even. I don’t’ see this as a money maker. Hoey – If the school board has a political problem in raising rates, it might help them if in our report we make the suggestion about approving this on the assumption there will be a 10-year payback. Tiffany – Would be another $25K incremental somewhere in that range. Stambaugh – Was at a meeting for a non-profit group that wanted to find a place cheaper than the high school. In the summer time you can go for a lot bigger buck. Tiffany – From a layman’s point of view, I don’t think for the school board to take this out of the project is not . . . It’s a doable thing because you have some leverage – size and A/C during the summer months. Kanyock – On our rates, we did price comparisons before we raised them. We are comparable with every other school district on the Cape and Vineyard. We’re not higher and in some cases we’re a little lower. We have not adjusted them in 20 years. Another thing, we have a 5-year Strategic Stream Committee and the A/C upgrade request came through that committee. Hoey – Sources and uses of funds, help me to follow the cash. Say you get another $28K a year? How can you use that money if the school board is free to think it can hire another teacher? Field – We are getting the school committee to recognize the deficit funding is in the utility sector; it has been vetted; it is structural; it has now persisted for over five years. Electric, alone, last year was under funded by $182K. All utilities (including landfill, sewer, water, fuel oil and electric) were to the tune of $308K in deficit, which leaves us scurrying around the last two or three months of the year shaking the bushes from the instructional account to plug that gap. We hope for a band aid in the FY13 appropriation of at least rearranging instructional support and infra-structure funding so that we can come close to covering $182K shortage in electric feeling that those rates will not going down.. Our utilization of facility is normal; so if you can’t touch the rates and your volume usage is fairly stable, you’ve got to face that it’s just cheating Solitaire if we don’t put all the money in the electric fund. It is Net. There is no Christmas gift check at the end of the year from the wind turbine. These are net costs on first year of usage for the wind turbine. We are through one complete year which was evident in our FY11 electric rate and the result was we were short $182K. Stambaugh – We talk about the cost of installation; but utilities will increase with the use of A/C. Kanyock – The rates on the auditorium will have to go up. Minutes for November 8, 2011, adopted Nov. 29 Page 4 of 7 7. Public Schools Stadium and Athletic Field Upgrade (Phase I) - $100k Sitting Hoey, Tiffany, Boynton, Williams, Stambaugh Presentation Kanyock – Synthetic turf, running track, upgrade lighting and bleachers and fences. Can save about $25K with updated lighting and turf. If area were fenced in, could use the field area more often and generate about $90K a-year revenue. Fields are now about $300 a day for renting the field. Discussion Tiffany – How hard a number is $100K? O’Neil – It is based on recent work on the Nobadeer fields, Kanyock - It is our best bet. Looked at recent work on Barnstable fields. The next phase would be to do the field, 3&4 would be to do the lighting and fences. Would like to do some community fund raising as well. Attempt here is to garner community support. The School Committee put forth a 5-year strategic plan; not available yet. Revenue does include out-side users. IF we had a fence and gate, would be able to control access and increase revenue. O’Neil – Synthetic turf has a 10 year life, lay down new carpet and can recycle old carpet. With our sandy soil, there will be no drainage issues and the turf could last a lot longer. Tiffany – We haven’t seen the out years. Hoey – Last year you showed one out year, then a three year gap then another. Kanyock – Last year didn’t realize I had to populate the spread sheet and those were Jack’s numbers. The reason it didn’t bring it, the school committee is voting on it next week. I will then forward it to Diane who can forward it on. Hoey – Want sheets for each of the out-year projects. It should go first to town management and eventually to use. Tiffany – Next year, a lot of stuff has been approved. Next year Those sheets needs to be to town management August 12th. End School projects Hoey – Point of order on how to proceed. Williams raised a concern about Kaminski’s presence. My thought was in inviting Mr. Kaminski, we have to remain in meeting. At 11, we can switch to a discussion in which Mr. Kaminski gives us the benefit of his experience. Minutes for November 8, 2011, adopted Nov. 29 Page 5 of 7 IV. MADAKET WIND TURBINE - $3.9M (approx) – Energy Study Committee Sitting Hoey, Tiffany, Boynton, Williams, Stambaugh Whitey Willauer, Vice Chairman Energy Study Committee – Goal is to have a town owned facility at Waste Facility at the compost heap. We looked at having a developer come in, but that had a score of problems. This is the optimum in cost effectiveness. The heap will move. The digester is the 2nd largest user of electricity in town. The capital cost would be $3.9M and would borrow about $3.4M. Annual savings would be $427K. If we get net metering, it covers Our Island Home, Town Hall, Fire Department, 4 Fairgrounds Road and 2 Fairgrounds Road. Three blades is the more modern technology; two-blades generate more noise. We are setting the specifications and having people bid in. Tiffany – Your cash impact says that over 20 year savings is $427K; that is with full net metering. If you take out net metering, you have $174K. It needs to be presented Willauer - Have met with the vice president of National Grid. They are going to support us and like it. We wrote a letter to the state and they endorsed it. George Arunson, Commonwealth Resource Management consultant (conference call) – Expect Net metering to be resolved before financing occurs. It is an answer we will have in hand within the next few months. Our hope, in terms of eligibility, is to have it by end of the year, certainly before Annual Town Meeting. Willauer – Had a wind feasibility study by SED Inc and AWS Truepower. Our wind here is outstanding. Brian Kaminski, consultant – This is an outstanding location with outstanding wind. Tiffany – When we look at the number, what are the plus/minus? Arunson – That data is available. Another point is the data will rep a long-term average. If you have a windy year, you put more money in the reserve fund. Don’t want to give a number off my head. It is available on the web site. Kaminski – We have data for one year. Should get data over a period and can get from Cape Wind. Would urge you to try to get that study. Greg Tivnan, Assistant Town Manager – That data is also available on the web site. Arunson – It is part of the quality control. I look at the scenarios for the PW900; you lose about 10 percent going from a P25 to P900. In a very calm year, the wind resource would go down about 8 or 9 percent. Whitey – Shadow flicker, not an issue. Williams – this is so far away from anyone, there is not flicker on residents. Hoey – Would encourage people to look at presentation given to Madaket last month. Sinatra – The next Public Forum will be held here in December at 4 Fairgrounds Road. Willauer – It has been modeled. Noise/acoustic level; we exceed level slightly on land Bank side by about 45 decibels. One house would have 41 decibels and the others are beyond the 30 decibels. Probably will not be a problem. Falmouth bought a surplus turbine with a fixed blade that is noisy. We believe this will not be a problem. Kamin – 6-8 revolutions per minute (RPM) per minute. The high school turbine runs around 6 and the slow RPMs contribute to less noise. Willauer – We can feather it. Long-Tail ducks did not like the area. We put up a sound sensor and heard seagulls and feral cats that scare off other species. Arunson – Most bird strikes were in California at higher RPMs on earlier version turbines. There are conservation plans you can take to mitigate. Off Denmark, the ducks have figured it out and fly around the blades. Boynton – Did Edie Andrews approve it? Arunson – This site was chosen because it is farther from Long Pond. Willauer – Capital Cost break down is wind turbine $1.67M, site prep $500K, electric sit $350K, National Grid electric $100K, mechangical/transport $300K, bonding $300K, management and other $240K, subtotal is $3.46M. Contingency $140K and development $300K. Total is the $3.9M. Tiffany – Normally would use in the 10 percent range of variable costs in other large capital projects Arunson – Contingency costs are flexible. Cannot speak to how that specific number was found. Tiffany – Would by $180K by my calculations. Willauer – Total source is 3.455M. Town has already paid 100K MASS CEC Grant is 345K. Total cost would be $3.9M Stambaugh – Would do a bond for $3.4M. What is the impact on the budget/the taxpayer. Willauer – Annual debt $260K. Arunson – Net Metering was originally put it for a resident with one solar panel and would get credit during the day when the sun was out so you pay only for the net. Generation and purchase are off-set over time. Until 2009, it was available only for very small facilities. Then it was looked at for more substantial projects and the law was passed in the Green Communities Act in 2009. Up to 2K Kilowatts (KW) are eligible for net metering. The project can be connected to the grid anywhere on the system and put electricity into the grid and is treated as if it credited into the meter. Net Metering was intended as an incentive for communities. Stambaugh – We are not directly using the power. We provide to electric company and they6 use it. Arunson – Most electrons go into the composter; when you get to a point, you fill out a survey, you take value of elect and change into dollars using a grid and generate a monthly credit. The composter used only 1982 megawatts per hour in FY2011. What happens if this net metering does not get resolved, what would happen? We would make a change in the interconnection so that Minutes for November 8, 2011, adopted Nov. 29 Page 6 of 7 we would actually put those electrons behind the transformer at the composter. If we rewire the turbine so that when the wind is blowing, the power would first go to the composter and the excess would go to the grid. If the wind turbine is providing all the power to the composter, the meter is registering zero for those periods. If it is providing half the power to the composter, the meter reads half. You have a quadrant meter that looks all directions and not only reads zero purchases but also register the amount generated. We put in a reduction factor; we’ve assumed that the turbine will provide only 70 percent of the needs of the composter and the rest would be exported to the grid. If you do it behind the meter, can only do one meter; you cannot do multiple. In that case, you could put the entire site on one meter. Hoey – Selling general obligation debt. Show 2.08 and that is good to show the voters. Since interest rates can change in six-months time, recommend prepare for 5.25% interest rate in the event they change. Willauer – Looked at the two cases in our two models. The first is full-net metering; the second is behind the meter. We still have 1.52 debt service coverage. Tiffany – That is good for bankers, but you are looking for a payback. You have 11 year payback which is good. W/out inflation about 7.10 year payback, which is still reasonable. Willauer –Still cover our interest. Tiffany – Longer the payback, the bigger the risk. Hoey – One of the risks is the fixed debt cost, which isn’t a risk because it cannot change. Tiffany – The issue is: Will it work for 20 years? Will a plane fly into it? We don’t know that far out. Arunson – You are looking at how long the value of the project in the pocket. If it shut down the next day, the value of benefit is still high. Tiffany - negative way to look at it is if it exploded after 10 years, you have a project with no value. Arunson – The town will have insurance. You would have to have an uninsurable risk – it stops operating and insurance doesn’t cover it. Stambaugh – The net cost to the town is not going to be a cost; but a net benefit? Tiffany – If it ceases operation in the middle of payoff time, you have a loss. You are talking about something that is providing a service that can be provided in another way. Hoey – As you look at the project, it is not just economical. So if it did break down at the end of the period, that doesn’t mean it was a waste. Tiffany – you have to hit the nice medium when presenting to people. Willauer – The most likely to break down is the gearbox, which is insured and you build into maintenance you ensure it is replaced every 10 years or something. Peter Morrison, Energy Study Committee demographer – Technological risks have been recognized and stem from the manufacturer’s track record. That is why we picked a manufacturer with a track record. Arunson – We talked about a failure of a piece of machinery. There are not that many moving parts. Some manufactures are entering the market with direct drive. The question is, do you want a tier 1 or a top-level manufacturer that has stood the test of time? You want limit the bidding to Type Certified Manufacturers who’s turbines have met the standard for long life. There is always casualty risk; and the town will have insurance for that. Another risk is economic. If the price of electricity goes down, it might have been cheaper to stay on the grid. If it goes up, you have a greater gain. One factor is regulatory or change in law. If there is some change that makes net metering go away, then you are back to behind the meter. It is highly unlikely the net metering will go; but it could happen. Another change in law that could help the town is the huge cost associated with Homeland Security. National Grid has to protect against attack to the grid and cyber attack. With rates going up, that could benefit the town. Stambaugh – It seems we are going back into the electric generation business. Will we have a new department with the town to manage the turbines and solar field? Who will manage it? Morrison – We are taking the first step on the path to that you can think of as a 15- to 25-year long-term strategy to take advantage of rapidly emerging technology that will automate a lot of this stuff. You have intelligent software that is managing things minute by minute to our advantage. Trying to make sure we always have electricity and keep down what we have to pay. It has a very low probability of blowing up on us but a high probability of being a gain. Arunson – To repair the turbine you will hire a tech on island with a pager to keep an eye on it day to day and bringing an expert for anything in under warrantee. There will be someone in administrative; it is within the scale of someone like Diane O’Neil. Not envisioning a department of town employees doing this. Tiffany – Who is going to manage the service contract? Tivnan – Town Administration with the board are trying to have Public Facilities Energy Management position. One person that would work with Diane, the school department and the Department of Public Works to not only manage facilities like the brand new one but to also do energy audits of all our decrepit buildings. That person would oversee the wind projects and solar projects. It is not in the budget yet, but that is the direction we want to go. Arunson – Should manage also the distribution. Hoey – Can you hedge fixed rate at which net metering is figured? Arunson – Not heard of anyone selling a hedge product tailored to Mass Net metering. Willauer – Pro-forma Basis Kaminski – If you take 900KW machine run at max one year get 1.8M. Most machines will be in range of 30-35 percent. Arunson – Not heard of anyone selling a hedge product tailored to Mass Net metering. Minutes for November 8, 2011, adopted Nov. 29 Page 7 of 7 Willauer – Pro-forma Basis Kaminski – If you take 900KW machine run at max one year get 1.8M. Most machines will be in range of 30-35 percent capacity factor. 45 percent is very high. Willlauer – HS does not have the location we have at the dump. We are at a height we could achieve max capacity. Bartlett Farm before it broke down was approaching that. Arunson – Go to areas with comparable conditions. Hoey – Is it reasonable to assume 45%? Kaminski – Have not seen 45% before and would like to see hard evidence you could produce that in a similar wind regime. Tiffany – When you go out for bids, will manufacturers, warrant a certain factor? Arunson – That is information better suited to AWS. You are talking about warranting a wind curve. Willauer – At 8 meters average, will you give us 45 percent. Arunson – Exactly. Hoey – Would like to see 33 percent and recalculate numbers on page 7 and 8. Arunson – 33 is a far cry from what we expect. It was only after we had the study done a third time, did our numbers in our proo-forma approached what you are seeing. You point about getting comparable numbers would be very telling. Willauer – We are asking about comparable wind velocity, do they achieve 45 percent? Kaminski – These numbers are based on probability. Arunson – SED did something comparable of what you are looking at. You point of concern is noted and will have to be addressed as we go forward. Tiffany – Want to drive the risk down. Want to quantify the risk. Willauer – People are concerned about property values. At first they dip and then they go up. Tiffany – Is this addressing a vacation environment? People come here not to look at windmills. Need something based on a recreational area. It might not be possible, but it would be nice to have. Stambaugh – In Denmark it is a comparable area. Tiffany – Need a study of property values that looks at Recreational areas. Willauer – De-commissioning cost would be about one-year’s worth reserve fund. Hoey – Where did $34,515 come from? Arunson – That would be money on hand when you make the decision whether to demolish or repair. We are looking at the metal market. Metal is a value item. Tivnan - $16K demo cost. $8K was salvage Willauer – Grants and contracts. Next forum is December. Attendance at the last one was week. Trying to get word out and get people to come. Tivnan – All meetings and forums are on the website. Since January, there have been 23 various public forums including HDC meetings. Lauren Sinatra, Town Energy Project Coordinator and Outreach Officer – Next forum is after Stroll when more people are in town. Williams depart 11:06 Stambaugh depart 11:15 a.m. Meeting ends due to lack of quorum. Adjourned: 11:16 a.m. Submitted by: Terry L. Norton