Committee Minutes

Grand Forks City Council Service/Safety Standby Committee
Tuesday, September 16, 2008 - 4:30 p.m._- Room A101 _____

The city council of the city of Grand Forks sitting as the Service/Safety Standby Committee met in Room A101 in City Hall on Tuesday, September 16, 2008 at 4:30 p.m. Present at roll call were Council Members Kreun, Bjerke, Bakken, with Bakken chairing the meeting.

Others present were Al Grasser, Todd Feland, Hazel Fetters-Sletten, Rick Duquette, Mike Flannery, Mike Kirby, Al Morken, Judi Paukert of Xcel Energy, and Mark Bucholz with ESG (Energy Services Group), Dave McFarlane of Environmental Engineering, Inc.

1. Energy Services Group presentation.
Rick Duquette, city administrator, reported that several months ago they started working with Energy Services Group re. cost savings for municipal buildings and utility use, contacted them and they have wide range of experience with public institutions, etc. and did an initial audit on our utility use, and asked that they walk through their findings and initial recommendations, very positive initial report from the Group with about 10 to 15% savings.

Mark Bucholz, Energy Services Group, reported they have had a number of meetings and recently presented results of the preliminary energy analysis and agenda is to introduce you to Energy Services Group, that they have done work in this area and across the State have done tremendous amount of guaranteed energy savings projects. The next step in the process is if the City chooses to endorse the concept of developing a guaranteed energy savings program for the City. By statute the NDCC does require requests for proposal, basically qualifications, and will see in presentation with regards to their background and capabilities.

He stated the first thing they look at is to save energy, and their programs are developed around saving energy and funding the capital that is needed to implement the improvement and the guarantee by the Century Code requires that the savings be verified, measured annually and for the term of the finance agreement so can get into these programs without any upfront capital and that their programs are developed from the cost that you are currently expending for your utility system and those are the savings that are redirected to help pay for the program.

Energy Services Group is a regional professional service provider and they work with existing facility owners primarily in the public sector; they are vendor neutral as their company does not sell product, technical arm and resource that is very objective as they look at energy alternatives and working with the State of ND they have done over 35 guaranteed energy savings projects and from a federal standpoint have done projects with the US Post Office, northern region and are completely certified with the Dept. of Defense and Dept. of Energy to work on federal programs.

He stated their technical staff consists of professional energy engineers who are responsible for designing specifications and many of these engineers are professional engineers, assisting them with the analysis of your energy systems, are technical analysts who know how buildings should operate efficiently. On the project implementation side have project managers and supervisors who are involved with managing the contractors, will work with local preferred contractors through this guaranteed energy savings statute and essentially what makes that work; they design the systems, install the systems and verify that systems have been installed properly and efficiently and is part of the guarantee phase. Our approach is to perform facility or system assessment, looking at things broader than energy, and once have results of that study to develop a financial plan, and the financial plan is looking at municipal tax exempt lease financing for the capital projects and working department heads to help fund non-funded mandated type services that the City is required to provide but looking at ways to leverage those savings in a cash flow neutral mode, and to oversee the implementation phase for the City.

Regional Experience and Regional Reference List:
He showed maps showing location of projects in the state and in Minnesota using this procurement process. He stated that recently they helped the University of North Dakota expand their system; NDDOT Office in Grand Forks and 1 of 8 district offices across the State of ND; City of Dickinson and Dickinson Parks & Recreation, the ND Facility Mgmt. Services; East Grand Forks public schools; city of Fosston, MN .

He stated they have provided preliminary assessment at no charge, worked very closely with Rick and department heads looking at facilities and systems, bench marking, profiling the energy usage over the last few years and visiting the facilities and systems to observe the operations and technology, etc. and that gives them the background that we need in order to qualify whether there is an opportunity and being a small company the no charge service for this step is because they do not spend money on marketing and is a way for us to show you how our company operates, etc. They did present a preliminary report in July to department heads and was good reception to that report. The next step is request for proposal for professional services, and then to get agreement on the number of facilities that they should be looking at, systems, and moving forward with a simple project development agreement that basically states that they are going to develop a self-funding program and no cost and no monies exchanging hands at that point until you get the results of that detailed analysis and final report. Final scope of work will ultimately get presented to the city council for their approval, and then project is constructed and depending on the term of the finance agreement, but in ND the statute is very specific that you can look at projects that have overall as savings of up to 15 years and during that time period they are accountable for measuring verifying and reconciling those savings and if miss on their guarantee, they write the City a check.

He stated in the preliminary study phase their objective is to qualify whether there was an opportunity here, high level review and don't have all of the answers but know that there is enough opportunity here for them to move forward and through that next step, to commit the resources, engineering that would be required in order to study the opportunities further. He stated they have looked at your utility history and are in excess of over $2 million, and if can save any amount on that it gets to be significant dollars quickly.

Results: They feel there is opportunity to move forward and as they look at the Green3 initiative and saving energy, saving tax payer dollars and investing those savings to pay for the improvements that ultimately will improve this. The range of savings they are looking at is just under $200,000 and $300,000 annually and when look at leveraging those dollars over a 15-year time frame, that those dollars are being written for utilities and your operations and on the backside those dollars that are saved, get redirected to pay the principal and interest on the capital that was financed. He stated they are talking 10 to 15% of your annual budget, that they didn't look at water and sewer and thinks there is even more opportunity in that area as well but most of your dollars are being consumed through electrical systems through motors, pumps, etc. and those are areas that technology can definitely be implemented and a lot of the savings will come from the electrical side.

He stated they did profile 6 buildings and when look at the cost per sq. ft., that becomes benchmark for them when they look at the opportunity and have buildings that are $1.50 to $2.41 and everyone of those buildings has different utilization schedules, etc. and there are opportunities in just about every facility that they were in that could generate savings.
North Dakota Century Code: They have done over 30 projects in the State of ND, and the vehicle they have used is the NDCC 48-05-09 through Chapter XIII and that statute says is that ND State and political subdivisions are eligible to procure in this manner the savings have to be in excess of the project cost, projects typically are financed through a third party, municipal tax exempt lease, the State has a master lease agreement and they have been dove-tailing off of that with most of the projects they have implemented. He stated when they get into the guarantee their savings are guaranteed to the point that they cover the principal and interest payment. The statute when it came out in 1992 was a 10-year term - two legislative sessions ago the legislators looked at the amount of deferred maintenance that exists in State buildings amended the statute to 15 years because by going out 5 more years, you can do half as much again in capital improvements.

There has been some discussion from Xcel Energy that there may be some utility rebates coming down the road and they have developed a lot of the programs across the State of ND with MDU, etc. and they have actual rebates for high efficiency and always calculate those and administrate those for the City as well.

The cost column is their going out and working with local preferred contractors and this statute because of the guarantee does not require a low bid specification because there is a performance aspect and can negotiate with the preferred contractors as they will have to guarantee their work and that is why the statute does include that; these projects are high quality and there are very few that will respond, because they not only have to guarantee their own component of the project but the overall scope of the work and not a lot of firms that do that. They are very specialized and very much in a niche market.

Sample cash flows - that if hit low target number of $190,000/year that over a 10-ydear term if they finance a $2 million project and pay for that project over 10 years and the City at a minimum would be guaranteed $529,000 in positive cash flow, so paying for the project plus you are banking a half a million and that is the conservative model and used a 10 year analysis for that particular cash flow; and if go up to the max. statute term, 15 years, they will be able to do a few more projects that had a little longer payback and by doing that their overall cash flow goes from $2 million project up to a $4 million project and paying for it over 15 years plus banking, $883,000, so all costs for the construction are fees, all the costs associated with that project would be paid for out of the resulting guaranteed savings plus bank almost $1 million. He stated he didn't want to leave this committee with an impression that we're talking a $2 to $5.5 million project but is trying to demonstrate that this procurement can help the City get some high priority deferred maint. items potentially addressed with the savings project as well.

Next Step: Public notice per statute is a sample, and that tomorrow morning will be presenting at the Alerus Center and have been working over there as well, to look at opportunities to see if there was potential to advance their process. This sample notice that would be published by statute and that they would dove-tail a joint request for proposal between two entities, essentially keep them separate after that and develop potentially an individualized program for each of the entities. This concludes his presentation.

Kreun stated that the savings that we would obtain from this and leverage them by utilizing them somewhere else - that they are using the savings to pay for the improvements.

Kreun stated that this is paid for out of the savings that we obtain through the capital expenditure or whatever work that is done and you are guaranteeing that if we borrow $4 million and it is $300,000/year in payments and we only get $280,000 worth of savings, you would come up with the extra $20,000. Mr. Bucholz stated yes, and that is in writing and is a performance guarantee. Mr. Bucholz stated that what they guarantee is the cash flow that is required, any excess savings and their approach has been very conservative because they do not like to write checks and when their engineers calculate savings, they will back off and not guarantee, they do not want to take control of your buildings away and have safety factor of 10 to 15% built into every project and is a conservative approach, the utility savings are based on historical energy costs so not an inflated number.

Mr. Duquette stated this is performance contract and we pay for any capital improvements and the savings and commission comes out of the performance contract, that Mr. Schmisek and Mr. Swanson began looking at the details and when get more detailed report put together to see how looks and works to make sure it is feasible, so far optimistic, but performance contracts require specific amount of money that we are going to save to pay for the capital costs and their commissions and wants to make sure it works before we step into this. He also stated he wasn't looking for a recommendation but wanted to update the committee and will bring more information back, will have Mr. Swanson look at the RFP process and begin to work with the company and keep committee updated.

Dave McFarlane, Environmental Engineering, Inc., stated that about year and half ago Pete Haga approached him with Mayor's Green3 policy and asked what they could do to get this going, that their firm has developed a strong reputation for delivering savings (County Office building, $90,000/year, County Court House was $40,000/year, and new Correction Center were projecting saving them $30 to $40,000/year, and swimming pools in the area $10,000/year range by fine-tuning things and making them work right) and have been working with this company and as they proceed through this process will make our company better and brings a lot to them that makes this whole team better.

Bakken stated this is good project and think need to look at it and move forward.

Kreun left meeting.

2. Speed limit changes on various collector streets (Info. item)
Al Grasser, city engineer, stated this is informational item, that they looked at some of the classified street system speed limits, primarily looking at collector streets (Belmont Road, Cherry Street and 40th Ave.S., etc.) on southend where have some newer streets which are wide and have relatively low speed posting. He noted that Jane Williams, traffic engineer, had prepared report and did speed study - that theory is to get 85th percentile of traffic speeds, rate range of speed on streets and try to get 85th percentile where 15% is above that mark and 85% below that mark. It helps in the enforcement end because it narrows down enforcement to that top 15% who are doing excess speeding an increase the propensity to do riding close on bumpers, etc.

He stated the streets they looked at are based on the 85th percentile speed limit: Ruemmele Road from 40th to 34th St. is at 25 and recommend posting that at 25 because of curvature of the road; and are changing the speed limits on the following streets from 25 mph to 30 mph: 36th Ave.S. from S. 34th to S. 20th St.; 40th Ave.S. from Ruemmele Road to Washington Street; S. 20th Street from 32nd Ave.S. to 47th Ave.S. He stated they will be looking at other streets.

He stated that Ms. Williams has some follow-up with the police department on the enforcement side and would like to reduce the number of signs, had report several months ago - there is federal mandate that they have to keep certain level of retro-reflectivity in their signs which means they will probably have to replace all their signs on a 10-year basis; and trying to reduce the member of signs, but if don't have enough signs out there when enforce it, first comment is that didn't see the signs, and trying to work with the police department on trying to come up with balance on that. He stated they will contact the street department who will make the signs and install them.

Bakken stated that down south every entrance to a city, the first sign is speed limit 25 mph unless otherwise posted, saves lot of signs. Grasser stated that ND does have a statute to that effect and if council directs them to do something, will certainly follow it, that he agrees with that but our practice has not been to do that - but provide additional notification.

3. Re-application for Class 1 General On and Off Sale Alcoholic Beverage license by
Mooddyz Bar and Casino, Inc.____________________________________________
Capt. Mike Kirby reported on September 2 the police department received correspondence from Howard Swanson, city attorney, relevant to the application of Mooddyz Bar & Casino for an alcoholic beverage license, asking the police department to provide a report to the council relevant to the criminal history of the corporation, its officers, directors and shareholders and provide the results of that review to the council. Part 1 of the application identifies Mr. Gary Edwards and Mr. Doug Boushee as the owners and corporate officers of Mooddyz Bar and Casino and Part II defines the personal information and provides the information that they were to verify and review. The review was completed by Det. Mike Flannery of Criminal Investigations Bureau and the results were provided in a letter to Chief Packet dated September 11, 2008.

Detective Flannery reported when he did the original background check on Mr. Boushee and Mr. Edwards, he was limited as to what he could check because this is for licensing, not criminal history check; and checked with NCIC (National Crime Information Center) to see if the person is wanted; checked with the Quiz System (CWIS, Standard County Warrant Information System); and was limited to our data base. He ran criminal history checks through CJIS (Criminal Justice Information System) on Mr. Edwards and Mr. Boushee and found Mr. Edwards' previous criminal history that was not in our current data base, November 1988, and found 2 felony convictions for Mr. Boushee . Criminal history on both of them is much more complete. Report submitted to the committee.

Capt. Kirby stated a little additional information on CJIS is sharing system that permits agencies to share their data on both state and local and some degree on a federal level, the intent of CJIS was to insure that the records management systems of individual agencies were jointly shared, and that he is not aware of any restrictions that would prevent us from using CJIS access for license check. The ordinance 21-0207 defines what information should be provided on the application, in both of these cases information was addressed in Det. Flannery's report.

The committee asked for recommendation from the police department. Capt. Kirby stated they would be prepared to say under Ord. 21-0206 it defines that no retail license shall be issued to any person unless the applicant shall file a sworn application accompanied by their fee and showing the following qualifications: subparagraph e) of the qualifications states that the applicant or manager must not have been convicted of a felony, and information has been provided in the report indicates that there are felony convictions relevant to Mr. Boushee so that information appears to be contrary to requirements of the ordinance.

Bakken asked if there were any questions from the audience - there were none.

Bjerke moved to deny the application, Bakken seconded the motion. Motion carried.

4. Other items:
Bjerke asked Det. Flannery to bring report on liquor license for the Toasted Frog back to the committee, and put on the agenda update if in opinion stage or if have conclusion.

Bakken stated he has not seen anything come back re. serving of alcohol to patrons in beauty shops and other stores. Capt. Kirby stated it was his understanding that information has been passed to Mr. Swanson for his opinion/guidance and as of this time haven't received response back.

Adjourn.

Motion by Bjerke and Bakken to adjourn. Motion carried. Meeting adjourned at 5:30 p.m.

Alice Fontaine
City Clerk