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HomeMy WebLinkAbout02162022 PACAB Special Meeting PacketPost & Commerce Advisory Board Agenda Packet Special Meeting Wednesday, February 16, 2022 Council Chambers, City Hall 12: 00 p.m. SPECIAL MEETING REQUEST Pursuant to Seward City Code 2.10.030 (2), this is to serve as the written notice calling a Port & Commerce Advisory Board (PACAB) Special Meeting on Wednesday, February 16, 2022 at 12:00 p.m. for the purpose of: Resolution 2022-0041) Of The Port And Commerce Advisory Board Of The City Of Seward, Alaska, Requesting Authorization From The City Council For The Board To Appoint And Lead An Ad Hoe Committee Of Interested Community Members To Identify Available Funding Sources To Continue The Ground Source/Seward District Heat System Project To Completion. The meeting will commence in the City Council Chambers, City Hall, 410 Adams Street, Seward. All interested persons are invited to attend the meetings. Signed this 9" day of February, 2022. Chair City Manager 2 Board Members Upon this request the City Clerk will give due and proper notice as required by SCC 2.10.032 (No business shall be transacted other than stated above) SPECIAL MEETING NOTICE Pursuant to Seward City Code 2.10.030 (2), this is to serve as the written notice calling a Port & Commerce Advisory Board (PACAB) Special Meeting on Wednesday, February 16, 2022 at 12:00 p.m. for the purpose of: Resolution 2022-004, Of The Port And Commerce Advisory Board Of The City Of Seward, Alaska, Requesting Authorization From The City Council For The Board To Appoint And Lead An Ad Hoc Committee Of Interested Community Members To Identify Available Funding Sources To Continue The Ground Source/Seward District Heat System Project To Completion. The meeting will commence in the City Council Chambers, City Hall, 410 Adams Street, Seward. All interested persons are invited to attend the meetings. All public is invited to attend. Posted: Wednesday, February 9, 2022 City Hall bulletin board U.S. Post Office Harbormaster's Building Seward Community Library Museum The City of Seward, Alaska SEWARD PORT AND COMMERCE ADVISORY BOARD SPECIAL MEETING AGENDA February 16, 2022 12:00 p.m. Council Chambers Brandii Holmdahl Chair Term Expires July, 2023 Lynda Paquette Vice Chair Term Expires July, 2024 Bruce Jaffa Board Member Term Expires July, 2024 Carl Hughes Board Member Term Expires July, 2023 Colby Lawrence Board Member Term Expires July, 2022 Benjamin Smith Board Member Term Expires July, 2022 Vacant Board Member Term Expires July, 2024 Stephen Sowell Assistant City Manager Norm Regis Harbormaster Brenda Ballou City Clerk 1. CALL TO ORDER 2. PLEDGE OF ALLEGIANCE 3. ROLL CALL 4. CITIZEN COMMENTS ON ANY SUBJECT EXCEPT THOSE ITEMS SCHEDULED FOR PUBLIC HEARING 5. APPROVAL OF AGENDA AND CONSENT AGENDA [Approval of Consent Agenda passes all routine items indicated by asterisk (*). Consent Agenda items are not considered separately unless a council member so requests. In the event of such a request, the item is returned to the Regular Agenda] 6. SPECIAL ORDERS, PRESENTATIONS AND REPORTS A. Proclamations and Awards — None B. Administration Report - None C. Other Reports and Announcements — None D. Presentations — None City of Seward, Alaska Port & Commerce Advisory Board Special Meeting Agenda February 16, 2022 Page I 7. UNFINISHED BUSINESS — None 8. NEW BUSINESS A. Resolutions 1. Resolution 2022-004, Of The Port And Commerce Advisory Board Of The City Of Seward, Alaska, Requesting Authorization From The City Council For The Board To Appoint And Lead An Ad Hoc Committee Of Interested Community Members To Identify Available Funding Sources To Continue The Ground Source/Seward District Heat System Project To Completion. 9. INFORMATIONAL ITEMS AND REPORTS [No Action Required] 10. CITIZEN COMMENTS [There is no sign in for this comment period. Time is limited to five (5) minutes per speaker.] IL BOARD AND ADMINISTRATION COMMENTS & RESPONSE TO CITIZEN COMMENTS 12. ADJOURNMENT City of Seward, Alaska Port & Commerce Advisory Board Special Meeting Agenda February 16, 2022 Page 2 Sponsored by: Board Member Jaffa CITY OF SEWARD, ALASKA PORT AND COMMERCE ADVISORY BOARD RESOLUTION 2022-004 A RESOLUTION OF THE PORT AND COMMERCE ADVISORY BOARD OF THE CITY OF SEWARD, ALASKA, REQUESTING AUTHORIZATION FROM THE CITY COUNCIL FOR THE BOARD TO APPOINT AND LEAD AN AD HOC COMMITTEE OF INTERESTED COMMUNITY MEMBERS TO IDENTIFY AVAILABLE FUNDING SOURCES TO CONTINUE THE GROUND SOURCE/SEWARD DISTRICT HEAT SYSTEM PROJECT TO COMPLETION WHEREAS, on November 26, 2018, the City of Seward received a $725,000 grant from the Alaska Energy Authority's (AEA) Renewable Energy Fund to build the Ground Source/Seward District Heat System demonstration project via Resolution 2018-089; and WHEREAS, this project i-s was designed to provide primary heat for the City Library/Museum and City Hall Annex, with options to include the City Hall and Fire Station; and WHEREAS, the project is fully shovel ready for construction; and WHEREAS, the benefits to the community are broad and include long term economic and environmental benefits; and WHEREAS, the project has substantial merit, beyond a return on investment, by showing the feasibility and benefits of using geothermal heat generated from Resurrection Bay; and WHEREAS, the project has stalled due to a substantial increase in the projected cost; according to the AEA in a letter dated June 23, 2020, the original cost estimate for the project was $882,497, but rose substantially to $3,600,934 after an independent cost estimate was conducted; and WHEREAS, funding sources from Federal Grants and private contributions are likely available; and WHEREAS, project costs can best be controlled by timely and creative approaches. NOW, THEREFORE, BE IT RESOLVED BY THE PORT AND COMMERCE ADVISORY BOARD OF THE CITY OF SEWARD, ALASKA that: Section 1. The Port and Commerce Advisory Board is interested in taking the initiative to appoint and lead an ad hoc committee of knowledgeable interested citizens, to include representatives of the city council and administration, to identify and recommend available sources of funds to complete the Ground Source/District Heat System Project. PORT AND COMMERCE ADVISORY BOARD RESOLUTION 2022-004 Section 2. This committee will advise council on construction methods and long term maintenance to minimize undo strain on City resources and Departments, and is requesting that council admonish them to lead this endeavor. The committee will not commit or expend any funds in relation to this project without council's express authorization. Section 3. This resolution will be brought to council on February 28, 2022 for consideration. Section 4. This resolution shall take effect immediately upon its adoption. PASSED AND APPROVED by the Port and Commerce Advisory Board of the City of Seward, Alaska, this 16th day of February, 2022. THE CITY OF SEWARD, ALASKA Brandii Holmdahl, Chair AYES: NOES: ABSENT: ABSTAIN: ATTEST: Brenda J. Ballou, MMC City Clerk (City Seal) ALASKA `.c ENERGY AUTHORITY June 23, 2020 Doug Schloesser Public Works Director City of Seward PO Box 167 Seward, AK 99664 RE: Renewable Energy Fund Grant #7091242 Dear Mr. Schoessler, This letter is being written in response to the City of Seward's (COS) request for extension of Renewable Energy Fund Grant #7091241. COS has requested a grant extension to pursue gap funding for the project due to an increase in construction costs since grant award. Originally, COS planned to connect four city buildings to a district heat pump loop. The original cost estimate for the project, including the $725,000 REF grant, was estimated to be $882,497 with a projected diesel displacement of approximately 17,000 gallons annually. However, after an independent cost estimate was conducted, the project cost estimate increased substantially to $3,600,934. The City of Seward has proposed a change in the scope of work which would reduce the number of buildings connected to the district heat loop from four to two in order to reduce the capital costs of the project. The current proposed project is expected to displace 10,554 gallons of heating oil from the City Library, Library sidewalk snowmelt and the City Annex. The cost estimate for the new scope of work is $1,440, 884. The Alaska Energy Authority has conducted an economic evaluation of the revised scope detailed above (see Table 1 below) #1: Full Project #2: Full Project #3: City of Seward #4: City of Seward Cost (AEA) Cost (YCE) Match Only (AEA) Match less DC Funds (AEA) Capital Investment $ 1,440,884 $ 1,440,884 $ 715,884 $ 615,884 B/C Ratio 0.48 1.62 0.91 1.03 NPV ($690,166) $1,815,019 ($6,784) $87,475 Payback Period 48 23.5 28 25 Table 1: Results of AEA Economic Analysis Column #1 takes into account the economics of the project as a whole, and is representative of AEA's basis for evaluating projects during the competitive REF application evaluation process. Typically, AEA will recommend projects for funding if the overall B/C ratio of the project is greater than 1. Column #2 represents the economic evaluation performed by You rCleanEnergy. The primary reason for the difference in the results between column #1 and #2 is the assumed heating oil cost escalation rate (see assumptions notes in Table 2). ��j ALAS KA A, ENERGY AUTHORITY AEA Assumption YCE Assumption AEA Rationale AEA's assumption is based on the EIA projections for Heating Oil Cost heating oil cost escalation. This value is consistent Escalation Rate Start at $3.95/gallon; Start at $3.99/gallon; with historical cost escalation, and is also consistent Assumption escalate 2.5% annually escalate 6% annually with AEA's approach in evaluating all REF applications. Cost of heating oil is held static after 2045. Based on a 10% increase from CEA rates to account Start at $0.19/kWh; Start at $0.16/kWh for transmission and line loss. AEA's understanding is escalate 2.0% annually bulk rate; escalate that the city is currently paying $0.22/kWh for the 2.75% annually Library's electric boiler rate which includes demand Cost of Electricity charges. $6000/year; escalate $6000/year; escalate O&M Proposed Case 3% annually 3% annually $3000/year; escalate Unclear if this was 3% annually included in YCE O&M Base Case evaluation Discount Rate 3% 3% Table 2: Discussion of Assumptions In conclusion, our modeling does not reflect an economically viable project, with a calculated B/C ratio of 0.48. AEA's primary concern is the City's ability to absorb the increase in project costs that are not covered by the REF grant paired with the marginal economic and financial benefits of the project. Additionally, there remains the risk of increasing project costs due to material and labor shortages and inflation as the timeline on this project continues to be extended. With these considerations, AEA will be granting a 90 day extension to provide the COS more time to make an informed decision as to whether it makes economic sense to pursue this project at this time. This extension will also allow time for the city to research and apply for additional funding. The full economic evaluation performed by AEA is attached to this email for your review. If you have any questions, please feel free to contact me. Best Regards, Josi Hartley Minimum Development - Project Type Grant/Loan Program Administrator Funding Range Local/Non-Federal Phase Funding Application Open/Deadline Notes Match Eligible? Unknown at this The first funding Broad range of eligible uses to improve energy efficiency and Energy Efficiency and Conservation Block Grant Program Dept. of Energy time ($660,000,000 Unknown at this time Yes opportunity is expected for reduce greenhouse gas emissions, including the heat loop program total) release in the Fall of 2022. project. Eligible uses: (1) Overall cost-effectiveness of energy generation, Unknown at this Applications for funding are transmission, or distribution systems; (2) siting or upgrading Heat Pump Energy Improvement in Rural and time Unknown at this Unknown at this transmission and distribution lines; (B) reducing greenhouse gas Loop Remote Areas Dept. of Energy ($1,000,000,000 time time expected to be open in Fall emissions from energy generation by rural or remote areas; (4) program total) of 2022 providing or modernizing electric generation facilities; (6) developing microgrids; and (6) increasing energy efficiency These funds will be distributed to states for their own energy State Energy Program Dept. of Energy Unknown at this time($8,980,000 Unknown at this Unknown at this Estimated first round of dal funds released date, 2nd programs --For AK, this will likely be distributed to the Alaska time time Energy Authority (where the Renewable Energy Fund Grant total for AK) puaasedrter came from City of Seward Capital Improvement Plan Years 2022-2027 Enterprise Funds 2022 - 2027 New or Forecasted Funding Source Deot Pmiect Descnotion Real— 2022 2023 2024 2025 2026 2027 Proiect Cost City Portion Other Source Source —Manhole refurbishment ----------- SMIC lower lift station (engineering only) ©-----�� Two double wall fuel tank�. 251, in 2023-2025 ------�� SMIC piping for bypass design & oonstruction Waste ter Lagoon sludge rem-1 Water Meter Program - with auto -readers Standby Generator —Mobile ----------- City of Seward Capital Improvement Plan Years 2022-2027 Enterprise Funds 2022 - 2027 New or Forecasted Funding Source Deot Proiect Descriotion Reolace 2022 2023 2024 2025 2026 2027 Proiect Cost Citv Portion Other Source Source Yearly Total:1 $ 11,729,639 1 $ 22,569,605 1 $ 3,310,000 1 $ 3,565,000 1 $ 6,500,000 1 $ 6,330,000 1 Total Project Cost: $ 50,479,244 Total City Portion: $ 38,454,244 Total Other Portion: $ 13,207,500 City of Seward Capital Improvement Plan Years 2022-2027 General Fund 2022 - 2027 New or Forecasted Funding Source P--intro. R-1- 1.11 7n- 7n71 7n" 7n— In" ai,-( 4 City Pnrtinn ( hnr Snnr- Snnr- Public Works Sidewalk and A ramp repairs Replace X $ 75,000 $ 75,000 $ - GF"earl" Public Works ADA Compliant Public Entr Modifcetion Replace X X X $ 300,000 $ 300,000 $ - $100,000 per year Public Works City Hall Parking Lot and Retaining Wall Replace X $ 55,000 $ 55,000 $ Public Works Public Works Bldg Design & Engineering New X $ 125,000 $ 125,000 $ Public Works Public Works Building Construction Replace X $ 8,000,000 $ 8,000,000 $ Library Library Emergency Exit Doors New X $ 15,000 $ 15,000 $ Public Works Lowell Creek Flood Control Diversion Tunnel New X $ 185,000,000 $ - $ 185,000,000 Public Works Lowell Point Road FLAP Grant safety study Replace X $ 80,000 $ 80,000 $ 2,750,000 Library Library Cameras New X $ 25,000 $ 25,000 $ IT IT Dept- City Phone System Replace X $ 250,000 $ 250,000 $ Fire Feasibility & Design Engineer Fire Station Replace X $ 250,000 $ 250,000 $ Fire & Police Public Safety Radios Replace X $ 280,000 $ 280,000 $ Police Feasibility & Design Engineer Police Department New X $ 250,000 $ 250,000 $ Police Public Safety or Police Building New X $ 15,000,000 $ 15,000,000 $ Campground Additional Campground Utility Sites New X $ 400,000 $ 400,000 $ - GF Reserves Campground Resurface Campgrounds Replace X $ 200,000 $ 200,000 $ Parks & Rec Resurface Playgrounds Replace X $ 300,000 $ 300,000 $ Parks & Rec Replace N. Ballaine Playground Equipment Replace X $ 300,000 $ 300,000 $ Parks & Rec Construct Wellington Pavilion New X $ aoo,000 $ aoo,000 $ Parks & Rec Evaluate/Rebuild Lagoon Boardwalk Replace X $ 2ao,000 $ zao,000 $ Parks & Rec Cemetery- Columbarium New X $ 35,000 1 $ 35,000 1 Funded in the 2022 bud et Parks & Rec ICemetery -Ground Penetrating Radar New X S 35,000 1 $ 35,000 1 IFunded in the 2022 budget Parks & Rec ITYC Facility Renovation Replace X S 75,000 1 $ 75,000 1 $ Yearly Total:I $ 750,000 1 $ 9,970,000 1 $ 15,470,000 1 $ 500,0001 $ 185,000,000 1 s I Total Project Cost: $ 211,690,000 Total City Portion: $ 26,690,000 Total Other source: $ 187,750,000 DocuSign Envelope ID: 121 ODD2A-OA1 4-42BC-8686-Cl 4EA04E1 CCE Alaska Energy Authority ALASKA Grant Agreement X�O& ENERGY Amendment AUTHORITY Grant Agreement Number CFDA# Amount of Funds AEA use only 1 7091242 $ 725,000 Managed Pass-thru Project Code(s) Proposal No. Period of Performance: 407109 RE91242 From: 09/01/2018 To: 3/31/2022 Project Title Heat Pump System for City of Seward GRANTEE GRANTOR Name City of Seward Alaska Energy Authority Street/PO Box Street/PO Box PO Box 167 813 W. Northern Lights Blvd. City/State/Zip City/State/Zip Seward, AK 99664 Anchorage, AK 99503 Contact Person Contact Person Doug Schoessler Josi Hartley, Project Manager Phone 1 Fax Tdoug@cityofseward.net Email: Phone Fax Email: 1 907-224-4058 907-771-3919 907-771-3044 jhartley@akenergyauthority.org AMENDMENT 4 Extend Period of Performance to March 31, 2022. City of Seward will use this extension in order to allow the City of Seward additional time to investigate alternative funding sources for the remainder of the project construction costs in the federal Infrastructure Investment and Jobs Act. The Authority and the City of Seward will continue to discuss the outlook for additional funding in the coming months to determine the appropriate steps forward for the project. All other terms and conditions remain unchanged. Grantee Authority Project Manager AEA Director Signature Date Signature DocuSigned by: Date Signature DocuSigned by: Date ` 1/19/2022 1/1 022�(f// J ette Bower, era ... Josi Hartley, Kirk Warren, City Manager Project Manager AEA Director Executive Director or Designee Signature Do Signed by: Date Curtis Thayer, I 1/19/2022 AEA Executive Director Page 1 of 1