HomeMy WebLinkAboutA001 - Council Action Form dated June 24, 2025ITEM #:28
DATE:06-24-25
DEPT:FLEET
SUBJECT:FLEET SERVICES - PURCHASE 12,000 GALLON BIODIESEL SUPPLY
TANK
COUNCIL ACTION FORM
BACKGROUND:
In January 2025, the City’s Biodiesel Program marked five years and more than 800 metric
tons of carbon offset. The City’s Fleet Services Department operates one 12,000-gallon
above-ground biodiesel supply tank with a dispenser. This tank is leased from Chevron REG
and located at the City’s Maintenance Facility at 2207 Edison Street in Ames.
The tank supplies 99.9% biodiesel (B100) to the City’s snowplow dump trucks and select fleet
vehicles and equipment. This also serves as a backup supply for CyRide buses now using
B100. Of Fleet’s total annual diesel consumption, an average of 35% is now biodiesel. This
does not include fuel used by CyRide.
City Council initiated the B100 Pilot Program in August 2019, initially as a three-year program,
in partnership with Renewable Energy Group (REG) of Ames. Included in the REG fuel supply
agreement is the lease of the 12,000 gallon supply tank with a pumping station for $1
annually, so long as REG is the sole provider of B100 fuel to the City. The City agreed to
properly license, maintain, and keep the tank in good working order. The three-year
agreement ended in September 2022, about the same time Chevron acquired REG.
Chevron and the City agreed to an extension of the REG supply agreement for two years,
which was written with amended pricing for B100 to equal the Des Moines area Gross Rack
Average price per gallon as published by the DOT. The extension ended in September 2024.
However, Chevron continued to supply B100 fuel to the City at the agreement pricing and use
of the Supply tank.
Chevron notified Fleet Services on May 12, 2025, of an end to any current agreement for
fuel pricing and equipment lease(s) related to Fleet Services B100 supply. Chevron has
offered to sell the 12,000-gallon supply tank and dispenser to the City for $60,000. While
Chevron wishes to terminate the existing partnership, they have indicated a desire in
the future to engage in competitive bidding to supply B100 to the City.
The B100 Program has successfully reduced greenhouse emissions for five years and will
continue to increase the percentage of cleaner biodiesel vs. petroleum diesel fueling the City’s
diesel vehicles and equipment, including CyRide buses. The supply tank and pump make this
possible.
The anticipated useful life for the existing 12,000 gallon tank is 25 years (20 remaining). As a
comparison, estimates from the existing tank provider, Separation by Design, to replace the
current tank and dispenser with a comparable new tank and dispenser in 2025 are listed
below:
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Estimated Replacement Cost:
Estimate for Tank and Dispenser 2025 pricing $125,000
Installation at current site 30,000
Estimate Total $155,000
ALTERNATIVES:
1. Approve the B100 Project fuel supply:
a. Approve the purchase from Chevron of the leased biodiesel 12,000 gallon supply
tank and dispenser installed on City property at 2207 Edison St. for $60,000.
b. Waive the Purchasing Policies and Procedures requirement for competitive bids to
purchase the existing tank from Chevron for $60,000 to avoid costs associated with
transport and installation of a new or used replacement tank and dispenser.
2. Reject the offer to purchase the tank and dispenser from Chevron and instruct City staff
to purchase a new tank or identify another alternative.
CITY MANAGER'S RECOMMENDED ACTION:
Fleet Services maintains a fund balance generated from interest on replacement funds,
which contains approximately $1,571,000. This fund was created to cover one-time
projects for Fleet Services and the Maintenance Facility. As shown above, there are
significant savings by buying the tank from Chevron versus a new tank. The savings,
plus the significant life left on the tank, make purchasing the tank the best fiscal
decision. Therefore, it is the recommendation of the City Manager that the City Council adopt
Alternative No. 1 as described above.
ATTACHMENT(S):
Amendment No. 1 to Biodiesel Supply and Tank Lease Agreement (color).pdf
B100 REG Contract - Signed.pdf
Resolution B100 Supply & Tank Lease Amendment.pdf
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RESOLUTION NO. 22-500
RESOLUTION APPROVING CONTRACT WITH
CHEVRON RENEWABLE ENERGY GROUP
TO SUPPLY 99.9% BIODIESEL (B100) FOR USE IN
THE CITY’S SNOWPLOW TRUCKS AND THE LEASE
OR PURCHASE OF REG’S 12,000-GALLON BIODIESEL TANK
FOR THE CITY OF AMES, IOWA
WHEREAS, in 2019, the City Council approved a unique agreement with Renewable
Energy Group Inc. (REG) of Ames, to conduct a B100 biodiesel pilot project. The project’s goal
is to reduce the carbon intensity of select City-owned diesel trucks by implementing new
technology to use 99.9% biodiesel (B100) in lieu of petroleum diesel; and,
WHEREAS, the B100 Pilot Project has used nearly 36,000 gallons of B100 fuel in 12 City-
owned trucks, offsetting 352 metric tons of carbon from petroleum fuel. Therefore, the project data
has shown the use of B100 in conjunction with the new technology to be a cost -effective way to
significantly reduce the City’s carbon footprint; and,
WHEREAS, REG has proposed an extension to the current agreement of two years, until
September 9, 2024. The fuel tank would continue to be leased for $1 per year during that time.
However, the price for B100 increases from a 5- cent discount to a price equal to the Des Moines
area Gross Rack Average price per gallon for #2 Ultra Low Sulfur Diesel, as published by the Iowa
DOT.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Ames, Iowa,
that the contract with Chevron Renewable Energy Group to supply 99.9% biodiesel (B100) for use
in the City’s snowplow trucks and the lease or purchase of REG’s 12,000-gallon biodiesel tank is
hereby approved.
ADOPTED THIS 13th day of September, 2022.
_________________________________ ___________________________________
Renee Hall, City Clerk John A. Haila, Mayor
Introduced by: Betcher
Seconded by: Junck
Voting aye: Beatty-Hansen, Betcher, Corrieri, Gartin, Junck, Rollins
Voting nay: None Absent: None
Resolution declared adopted and signed by the Mayor this 13th day of September, 2022.
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