Committee Minutes

Grand Forks City Council Service/Safety Standby Committee
Tuesday, October 26, 2010 - 5:30 p.m.____________________

The Service/Safety Standby Committee met on Tuesday, October 26, 2010 at 5:30 p.m. in the council chambers in City Hall with Council Member Bjerke presiding. Present at roll call were Bjerke, Grandstrand, Gershman (ex-officio).

Others present included: Al Grasser, Dean Rau, Mark Walker, Todd Feland, Chief O'Neill, Saroj Jerath, Chief Packett, Daryl Hovland, Greg Hoover, Mayor Brown, Rick Duquette, Dale Bergman, Pete Haga, Melanie Parvey..

Chairman Bjerke called the meeting to order at 5:30 p.m. and as only member present, stated all items would be forwarded to council.

1. Energy Audit and Project Development Agreement for Project No. 6389, guaranteed energy savings project for various city buildings.__________
Mayor Brown stated that this project originated sometime ago and have had on-going
process to work out the details and bring back the best proposal possible, that they have refined the original proposal and believe with your action the City can take leadership role in saving both energy and money for our citizens, expecting to save a conservative estimate of $200,000/year in energy costs and Energy Services Group will guarantee that amount. It is consistent with our work with the Energy Efficiency Conservation Block Grant, and due to the EECBG we are improving the fire station and assisting homeowners in saving money and expecting to improve the overall working environment for our city personnel. We are expecting to be able to move forward with about $2m in building improvements that are not just energy related but overall necessary maintenance and still expecting to do this with no local city dollars. He thanked everyone who has worked on this from the community members of the G3 Council, council members, the ESG staff and to city staff who keep moving this forward.

Mark Walker, asst. city engineer, stated we are in the next phase of this guaranteed energy savings project, and reviewed some of the basics of the project and that Mark Bucholz of ESG will do a more detailed presentation of the project. The City owns a lot of buildings and a lot of improvements that could be done to those buildings that could save energy consumption cost as well as maintenance costs, that if we could do improvements on those buildings that would pay for themselves but haven't because of complexity of them, budget constraints and lack of a guarantee that the savings would be there to pay for the capital investments. He reviewed process to do this type of project, and that currently the NDCC allows for governmental agencies to enter into guaranteed energy savings contracts with qualified contractors to analyze the buildings, secure bids on features that the City would select and guarantee that the money that we would save in reduced energy costs and maintenance savings would pay for the capital investments.

Grandstrand reported present.

We are at the step to do the audit agreement, and if decide to pursue, that payment for the audit is either through money that we would save in future utility savings or maintenance savings, or pay for it with a grant, which is in hand and would cover the costs of this audit. He stated they have also applied for an additional $50,000 grant and hope to receive word on that.

Mark Bucholz, account executive with Energy Services Group, made brief presentation of the energy audit, reported they have been working with the City, two years on preliminary studies; relative to the guarantee and the procurement for energy services with a guaranteed outcome and what will come out of the next step for detailed audit and potential projects that will require capital and funding for that capital. They have spent lot of time with department heads making sure have right scope of facilities.

He reviewed background of their company, that they provide professional services that allow for energy and facility management planning - and have been providing services in ND since 1997 and have impeccable track record, served over 50 clients and 95% of clients are public owned facilities and are dedicated to the public sector. Two years ago were acquired by Honeywell International and ESG positioned very well. Funding Solutions - look at ways to save taxpayer dollars and most of the projects and funding they provide for paying back the capital is from your existing budget and that ties in with G3 initiative saving energy, saving taxpayer dollars and if save energy can reduce the amount of greenhouse gas. They are vendor and contractor neutral and do not push Honeywell but work with clients preferred contractors, vendors, etc. to make sure get competitive bids.
That in 2007 provided a report of findings is where the $200,000 comes from, that was a percentage of utility bills for the 2008 calendar year, almost $2m worth of utility expenses to maintain not only the city facilities but also the infrastructure and utility consuming systems such as lift stations, traffic lights, etc. Request for Proposal: that is something required by the NDCC and have now nailed down the technical audit as to scope of facilities and will be presenting an energy audit and project development agreement to the city council for their approval on November 1 agenda. The engineering phase lasts 6 to 9 months and have a final report sometime in July and from that would be able to pick and choose projects and be able to see savings and paybacks based on total costs divided by savings. The council would have another decision to make as to whether to move forward with the recommended program under an energy services agreement with a guaranteed savings would be guaranteed sometime next fall and then go into implementation, ESG's role would continue to be professional provider and they would manage the construction phase for the City and their designs would be bid out to local contractors and at the end of that construction phase, they would commission the work to make sure that what's been designed has been installed and that becomes starting point for the warranties, etc. but also for guarantees. Guarantee support is for up to 15 years is what Statute requires and that they would be responsible for the savings and have to verify those savings annually and guarantee is simple - that if they miss, then write a check for the difference.

They have had several meetings with Saroj Jerath re. financing and that is not an issue at this point, they are looking at the energy audit and there will be a number of financial vehicles that can be used in order to secure the capital, one of which is quite common is to do a municipal tax
exempt lease so get low competitive interest rates on the capital amount and tie energy services agreement and guarantee gets tied back and become a party to repaying the principle over the term of the agreement.

He stated they are accountable for their assessment and their design, construction work and outcome of guaranteed savings over the term of the program and if there is every a problem with a contractor its ESG where the buck stops

He stated their goal is not to replace systems as much as it is to correct design deficiencies and make those systems operate more efficiently, recommissioning process. He stated they will be looking at the aspects of health and safety as it relates to ventilation rates, making sure providing enough fresh air for staff and occupants, and will be reviewing how the maintenance staff is maintaining these systems - and have recommendations for training or rate sourcing. Once they have the information back they will work with the City to develop a financial plan and that is when the next decision will need to be made is when the results of the audit are back in the form of a final report and will work to look at ways beyond capital budgets and all is based on paid from savings, self-funding and looking at low interest tools for interest programs, grants, rebates, etc. and providing multiple cash flows. The implementation plan to collaborate how go towards construction, they are working with the Alerus Center right now trying to figure out to implement a program - works to make sure that we have an implementation plan that they are managing the contractors on the City's behalf and making sure that their work is done in accordance with Codes, etc. The post project support is the measure verify the savings and those are the statutory requirements.

Funding Concept - when they are finished assessing the City's expenditures relating to utilities ands the repairs and maintenance of the facilities and infrastructure that becomes the pile of money that they will in turn be working from to generate the savings that will be leveraged to pay back the improvements - working within current budget. Exhibit A is part of project development and technical energy audit agreement and includes 130,000 sq.ft. of facilities and some added value and number of lift stations, etc. that don't have sq. ft. but look at everything from street lighting, traffic lighting, etc. to look for ways to save energy. Resulting fee is the audit costs are based 10 cents sq.ft.

They have a final report and can start in 6 to 9 months, have a roadmap to pick and choose and the city council will have final say in the final financial and technical scope and mutually defined by ESG and the City of Grand Forks.

Grandstrand stated it would make no sense not to do this, and do every building possible, and only concern is that if we have the best price possible - can set example for residents and use as a P.R. opportunity to talk about some of our programs - housing and urban development and some of the local non-profit programs that help people do the same thing in their own homes which can save them a lot of money as well.

Gershman stated their guarantee is 10% over 15 years and if that is their threshold. Bucholz stated guarantee won't be determined until are done with the final assessment - 10% is conservative estimate based on their engineers having been through the facilities and looking at current expenditures. Gershman stated the energy audit will tell us how much our initial investment would be on new equipment and retrofit fitting, and concern if we are going to retrofit, would we be better off buying new - concern about retrofitting things, that all of the equipment they will be looking at because if factor that part in and in 5 years replace $xx worth of equipment, will have to do that anyway and that becomes the savings. Mr. Bucholz stated the retrofit is new and is something that will be documented and that in the next step where a number of things will be providing in a final report, one of which is buildings systems profile and that identifies all of the equipment, ages, etc. and a lot of good information and that they always look at the life-cycle costs of equipment because if guaranteeing the savings for 15 years. Where retro-commissioning comes into play is assuming from the post-flood a lot of systems that were up-dated and a lot of those systems probably need to be recommissioned and making sure has capabilities to meet Code for fresh air, etc. and want to make sure that the systems are tweaked so that they match up with the facilities that are being utilized today - that if the systems don't get corrected as you add additional spaces - that don't want to waste extra money by replacing things that don't need to be replaced.

Financing - Mr. Bucholz stated that they talked with Saroj Jerath, that ESG does not finance this work but what they do is that when a business is developing and implementing these types of plan, they work with the financing providers they provide low interest type vehicles for obtaining the capital - that in talking to finance department re. advantages of leasing a capital lease and there is an appropriations clause that doesn't take a way from the bonding capacity of the city, those are things they w ill look at when they come back with the results and that will become part of the discussion.

Gershman stated he would like to throw in another property that he thinks we need to look at - Corporate Center, that it is a triple-net lease but that we own the buildings, have had tenants that have had some issues and would like to see us incorporate the Corporate Center in this project to see if there are any savings there, Hoover agreed that it can be done.

Bjerke stated that we can choose ways to pay for it when it comes time, either of 2 grants or incorporate the savings - all the construction or retrofit work will be bid out and every contractor who does that type of work and wishes to bid for that business - Mr. Bucholz stated they will have the opportunity and bidders will be invited because of the guarantee as ESG is accountable and that there may be some contractors that they wouldn't like -- Bjerke stated there will be multiple contractors in Grand Forks who would meet your requirements and will have opportunity to bid for business. Mark Walker stated that the bidding won't be done by the City, but by ESG - ESG will be supervising the work.

Bjerke stated re. financing that he would like to look into self-financing and to pay for it upfront and why finance it for 15 years - that we have a lot of enterprise funds built into this and would like that looked into that versus financing. He stated that we are now doing a public works remodel, PSAP remodel and also central fire station and maybe too late for public works but for PSAP and central fire station and that if there is anyway we can get these 3 into this - but doesn't want us to duplicate our effort. Feland stated they have done 25 to 30% of the building and another 3/4's of the building left that they would go through. Chief O'Neill stated they are doing bids on November 1 and that is grant money and not City money being spent on that. Bucholz stated they talked about that issue and great that they are moving forward with the energy improvements and that maybe there are some things that they could catch when they go through that facility. Chief O'Neill stated that he would have to check on the timeframe - Bjerke stated they could make those buildings a priority; and that he would like to see them come up with some comprehensive HVAC maintenance and how we do things and potential for some savings if we maintain our permanent property.

Mark Walker stated sometimes more energy efficient equipment is cut back on, problem is that have budget restraints. He also stated to point out the question Mr. Gershman brought up and that is the amount of savings that we have - that when we put together a plan that will determine the cost for a project vs. the savings they will have over a 15 year period (estab. by the State) not allowed to look at anything more but ESG will come in with a project of guarantee and they will be conservative on their guarantee and not going to look at what might be ultimate savings but bring back what they will guarantee and will be conservative number - our savings will be above and beyond that and that we look at a reasonable rate of increase for utility rates, inflation, etc. utility rates go up much more than what we originally anticipated, our savings will even be greater as you look at utility rates keep on increasing.

Bucholz stated they are required to have performance bond, insurance etc. on the project; and performance bond on construction work and performance guarantee on the savings. He stated that once they get into the guarantee phase they are required to measure verify those savings - that cost is an administrative cost that gets passed on and also be paid for from savings and that is another service they will be providing for the duration - the Statute has been amended so that after 3 years you can opt out of those services.

Dave McFarlane, McFarlane, Inc., Grand Forks, stated they worked very closely with ESG, when Pete Haga approached him about how we could start doing some of this several years ago, he brought in ESG just to help do this because he knew they had the financial backing, engineering, etc. and ESG is going to propose a solution that is going to solve the problems, and they have done this on several buildings and that you are going to see instantly whether they are saving or not - not something that is going take 15 years but happen instantly - and listed number of buildings where savings have been happening for number of years, including County Courthouse saving $45,000/year and have done for 4 years, and Correction Center, new building, 3 years, $35,000, Alerus Financial on S. Columbia, $13,000/year for 2 years, and that will not change because if change something is broken

Mr. Bucholz thanked Mark Walker and Mr. Grasser and everybody that he has worked with and pleasure to work for City of Grand Forks. Motion by Bjerke and Grandstrand to approve and forward recommendation to city council, and to include Corporate Center with city buildings. Motion carried.

2. Federal Transportation funding nomination - HSIP.
Dean Rau, asst. city engineer, stated this is Highway State Improvement Program (HSIP),
look at high crash rates, pedestrian safety, and working with Grand Forks District Office have identified turn lane issues on S. Washington from 17th Ave.S. to 28th Ave.S. and this project will realign the turn lanes for better sight distance and improve traffic safety in those areas. Also looked at adding turn lane for southbound traffic at 28th Ave.S. to head west towards Rydell Center, currently no turn lane, and help avoid rear end collisions, and recommending approval of this project and sent to DOT. Motion by Bjerke and Grandstrand to forward to city council. Motion carried.

3. Specifications for clandestine laboratory processing equipment.
Chief Packett reported this is staff report and that the City is pass-through agency for the
drug task force that wants to go out for bids, this would be equipment for the drug agents to tear down labs once discovered and be decommissioned, basically protecting equipment that they would wear, and they have been trained for this task, and equipment would be purchased with JAG grant (funding of $33,298.00). Request for council to allow them to go out for bids. Motion by Grandstrand and Bjerke to forward to city council. Motion carried.

4. Public Transportation Department: transportation improvement plan request for FY2010 Federal Transit Administration Section 5309 Funding Allocation._______
Dale Bergman, public transportation, reported they were bringing forward the 5309
Federal Transit Grant for 2010 and trying to get projects set, when originally put together for Class 500 Vehicles to have 2 of them that they currently have that are 2006, which are over the age limit and mileage limit; also 3 Dial-A-Ride vans that originally had put on four but only gave us one-third of the funding requested and ended up getting funding from other sources; also a bus washer that needs to be replaced; and shop equipment; received one-third of what requested from the State of ND. Motion by Bjerke and Grandstrand for approval and to forward to city council. Motion carried.

5. Matter of purchase of 5 Dial-A-Ride/Senior Rider vans via the North Dakota Department of Transportation Procurement Office State Bid and 2 transit
fixed route buses from the Minnesota State bid._________________________
Dale Bergman, public transportation, stated they put the 5309 capital grant to purchase 3
dial-a-ride vehicles and other 2 for dial-a-ride vehicles are replacements of current vehicles and have 3 that are over the age limit and mileage limit, close to 180,000 on dial-a-ride vans and are only a 4-year 100,000 mile vehicle and cost high to keep those on the road - and are asking for replacement of them. With the replacement of our vehicles that we have, have replaced 3 of them and the current 3 that they are looking at having, and adding 2 other vehicles which came in from New Freedoms Funds which is 5317 funds and come as pass-through funds from the State of North Dakota and we would be looking at adding another vehicle on board and would give us a total of 7 vehicles that would only last for one year before the other vehicle would exceed its mileage and age limits - asking for 7 total vehicles for Dial-a-Ride service and then going back to 6 after one year. Currently ridership is going from 61,650+ rides this year and on track to go to 62,000 rides for service. Current cost for dial-a-ride is $8.64 and costing City $5.89/ride and passenger pays the difference or $2.75. Currently they are out for a bid to see what the new current provider is going to be providing for the City, have that opening on Thursday, the 28th and that will be brought back to next Service/Safety Comm. They are currently using 9 of the air transit contract they have hired, using 9 of his vehicles in addition to the current 5 City vehicles and seeing increase in ridership this year. Their recommending is add the vehicles, 2 funded through 5317 funds (New Freedom Funds) which is 80% federal funds and 20% local match. With the Capital Grant, having that approved, would get 83% funding on capital grants and 17% local match to cover those costs.

Bjerke stated concerns about growing government, that we continue to expand. Gershman stated that if costs do go up, will have to look at the $2.75 that the passenger pays. Feland stated that in next year's budget have a 30% increase on rides - when receive bids come back with recommend-ation. Bjerke stated that if the bus fee stays at $1.50 the highest this can go is $3.00. Bergman stated that daily they receive applications for ridership, applicants must meet federal guidelines. It was also noted that for bus ridership looking close to 262,000 or 263,000 rides, can guarantee that UND in the month of September has seen a triple increase in ridership from last year, and that students like the way the fareboxes keep track of it - would like to show committee how it works and that the Student Government Office is asking them to come out and demonstrate it the student center committee and working on dates. Motion by Bjerke and Grandstrand to approve and move this forward to council. Motion carried.

6. Grand Forks Wastewater Treatment Plant service platform bids.
Don Tucker, wastewater, presented information re. bid for 2 service platforms to serve the Strobo fans and headworks makeup air unit at the plant, and asking to approve the low bid of Sand Steel in the amount of $37,700. Motion by Bjerke and Grandstrand to approve and move forward to city council. Motion carried.

Adjourn

Committee moved to adjourn at 6:45 p.m.

Alice Fontaine
City Clerk