HomeMy WebLinkAbout2007-04-23
Bulk Fuel Committee Meeting
Meeting Minutes
April 23, 2007
Present: Whitey Willauer, Chairman, Brian Chadwick, Al Peterson, E. Foley Vaughan
Also Present: Libby Gibson, Town Administrator, Leo Roy, VHB, Drew Shelton, VHB, and Janine
Torres, Administrative Assistant.
Mr. Willauer began the meeting at 3:04 P.M. asking the questions, "who should own the project?" and
"what kind of constraints does that put on it?" If town owned, a constraint is that it must break even.
AI Peterson noted a conversation with Charlie Gibson, who said for the town to run, requires a
legislative act, which could be a two to three year process. Mr. Vaughan added commercial opposition
to special law passage may be successful and kill the project. Mr. Chadwick asked iftown licensed a
private entity with input from the town, would the process be quicker.
Mr. Schwarzenbach from the audience and a member of the Energy Study Committee suggested under
existing law, towns can establish energy resources commissions and believes that commission could run
the project and is worth looking into.
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Mr. Willauer suggests asking Town Counsel what problems a separate enterprise account might caiise.
Mr. Peterson added there might be a caveat that enterprise funds may not excee4 1% oft~own
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budget. Ms. Gibson noted there are restrictions but wasn't sure of the percentage. N
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Mr. Willauer summarized the scenarios for owning:
A. Town enterprise fund
B. Outsourcing - Private under town license
C. Energy enterprise
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Discussion took place regarding the borrowing capabilities comparing town borrowing vs. private.
Outsourcing would eliminate hedging problem but also eliminate price control. Discussion on whether
this would constitute a monopoly followed. Mr. Soverino from the audience suggested asking Legal
Counsel if the town could create a monopoly.
Discussion moved towards the issues regarding the downtown tanks and the harbor and what the town
could set up to limit harbor use with "special act" coming back into play.
Mr. Willauer added the Airport should be added to the scenarios of ownership. Mr. Peterson explained
the FAA's preliminary position on airport ownership. Mr. Vaughan added he believed airport
ownership would also require a special law .
Leo Roy of VHB refreshed the committee that a critical element no matter what scenario will be
potential operators interested in coming due to the relatively small size of the facility. Irving Oil is no
longer interested in investing in this facility, or operating it due to their New Brunswick facility
expanding with LNG. They are still interested as a supplier.
Mr. Roy continued to include the type of terminal proposed is a sophisticated operation and will require
a well experienced professional operator. Continued conversations are planned with Global and
Sprague to gauge their continued interest in the project. Harbor Fuel has also expressed interest.
Based on the questions posed in the last meeting, Mr. Roy suggests looking at the project in three
sections, design and construction, operations and supply. This may improve competition interest.
Mr. Roy projected what he saw as the Committee's main concerns, legality, financial, including risk
and managerial. Keeping these three items separate may make it easier to sort out the options. A list of
the specific issues should be submitted to Legal Counsel to create a pathway on which direction to take.
After discussion it was decided to proceed with the project and invite Town Counsel to advise on the
legal issue.
Mr. Vaughan suggested adding a fifth scenario as discussed at the last meeting of a hybrid
public/private where the public builds the facility and the private runs the facility. Mr. Vaughan feels
this scenario should be looked at first. With a public entity running the facility, we might eliminate the
need for special laws and other problematic issues. The remaining concern with this scenario is the
public building it and then finding no operator or supplier.
Mr. Roy interjected the option of using an EPC Contractor (engineer, procure, construct) and require a
performance standard ensuring the builder comply with that standard. Mr. Roy strongly suggests
finding the operator and potential suppliers on board so that their operating constraints are known
during the build process.
After discussing the borrowing costs vs. construction costs, Mr. Vaughan shared the airport's fuel farm
project as an example of a public/private where the airports fuel supplier, Ascent Aviation, built the fuel
farm and arranged a pay back schedule through the fuel purchases. As it turned out, state funding was
awarded for the project and Ascent paid back within two months. Mr. Vaughan suggests inviting
Ascent as a potential capital investor for this project.
Mr. Soverino, as a Finance Committee member, expressed his support of the project as a way to share
the revenue to subsidize the town's budget. Giving any portion ofthis project away to private control
can impede the town's revenue opportunities. In addition, Mr. Soverino believes the environmental,
harbor protection, should be the impetus of the project.
After discussion, it is believed there are several ways to ensure a revenue stream to the town but need to
approach Town Counsel.
Mr. Peterson believes the best option is to find an investor to design and build, town buys back from
builder, and leases to operator. Mr. Vaughan reminds the committee this comes back to can the
town/airport be in this business.
After discussion, it was decided to invite Ascent to the next meeting to gauge their interest and possibly
invite state regulators as well. Mr. Peterson to work out dates.
Mr. Willauer reviewed the basic assumptions: Build a tank farm on airport property, disestablish the
downtown tank farms and integrate into the Harbor Plan. The following question needs to go to Town
Counsel: How can/could the town and/or airport be in the fuel business?
Mr. Peterson pointed out VHB consulting contract is running out and will need amendment to continue.
Ms. Gibson to work contract/amendments with Mr. Peterson. It was noted $250,000 is currently in
town's budget for this project.
At 4:20 P.M. it was m/s/p to adjourn.
~~fullY submitted,
',-, . 'Torres, ~~~~~~
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