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HomeMy WebLinkAbout~Master - Special Meeting of the Ames City Council 05/15/2012MINUTES OF THE SPECIAL MEETING OF THE AMES CITY COUNCIL AMES, IOWA MAY 15, 2012 The Ames City Council met in special session at 7:00 p.m. on the 15th day of May, 2012, in the City Council Chambers in City Hall, 515 Clark Avenue, pursuant to law with Mayor Ann Campbell presiding and the following Council Members present: Davis, Goodman, Larson, Szopinski, and Wacha. Council Member Orazem was absent. DETERMINATION OF QUESTIONS TO BE ANSWERED REGARDING EXTENSION OF UTILITIES ALONG EAST LINCOLN WAY TO 590TH STREET: City Manager Steve Schainker said that Council has included this project in the Capital Improvements Plan (CIP) and has approved raising water and sewer rates to accommodate the growth. Mr. Schainker said at the January 7, 2012 Goal Setting Session, Council committed to determine what information is needed to make a decision regarding extending utilities to 590th Street. He said that two members submitted questions, of which fell into three categories: •The need for a payback analysis to justify this investment •The need to develop safeguards to ensure that the land served by this infrastructure investment yields benefits beyond the direct financial payback •The need for further analysis to generate information that would guide City Council decisions Mr. Schainker said he would like to know which questions need answered before the Council makes the final decision, and if the Council desires to move ahead with the project, the next step would be to begin the engineering and design. Council Member Szopinski said this is a project the Council could do if the answers to the questions make sense. Council Member Larson stated that the majority of the Council members don’t have any questions regarding the project. Council Member Wacha said he would like to see projections of property and sales tax revenues with different build out options. Council Member Szopinski asked about the water supply in the stated area. There was discussion regarding water, and how to define “payback.” Mayor Campbell invited Assistant City Manager Bob Kindred to discuss the water issue. Mr. Kindred said he did not have any updates. Mr. Schainker said the City will determine if it is the City’s legal responsibility to provide water. Mr. Kindred said the rural water authority stated in a joint meeting that they could provide the water for anything that is needed. He said that they are not required by law to provide fire protection water. Council Member Goodman said there is a point at which you have to make sure someone can do what they say they can do. Mr. Schainker said the City must get a firm response on water in the area. Discussion ensued on water. Council Member Goodman discussed his analysis of Lincolnway Energy’s payback. Council Member Larson asked several questions, and the discussion on payback continued. Member Wacha asked if staff could provide a scenario or two that would be realistic if Council wants to proceed with this project. Mr. Schainker said many assumptions would need to be made based on the absorption rate. He also said many things could be calculated into the payback, and suggested staff could come up with a rationale subject to particular assumptions. Mayor Campbell said there are water and sewer costs, and the payback coming in the form of property taxes. She asked what Council is asking staff to do. Member Goodman said he wants to understand the return for the money spent. Member Szopinski said she wants to make sure the research shows there is industry interested in coming to Ames. She also said it would be helpful to know why certain industries chose other cities. Member Szopinski also mentioned she wants to be sure this is the right site. Member Larson said that he and Member Davis are currently appointed by the Mayor to sit on the Ames Economic Development Commission (AEDC) Board. He said at those meetings, the development community and people hired to do economic development for Ames say that train and rail access is in huge demand. He discussed several opportunities that have been recently discussed for Ames. He said he argues that the location is good, and there is demand. Member Davis said the location is farther from residential areas than the other possible sites. He also said that for Union Pacific Railroad, industry needing rail access needs to be on the south side of the tracks. Discussion continued on rail access. Member Szopinski again stated that she would like to know of industry successes, and also names of companies that wanted to come to Ames but decided against Ames, and the reasons why. Member Wacha reiterated that many assumptions need to be made for staff to tackle the first category. He said he would like staff to make the assumptions, and state them, and return something to Council as a starting point. He said the scenario would include certain assumptions and the absorption rate based on x number of acres, using numbers from industries such as Barilla and Lincolnway Energy. Mr. Schainker said the payback cannot be calculated simply. When other benefits are looked at, such as salaries, generated sales tax by employees, etc. the calculation can get very complicated. He said just using property taxes, however, is not a fair analysis. Mr. Schainker said it has been determined that there is not adequate large-lot industrial land, which means that utilities must be extended, which is the responsibility of the City. He said the part of this that is causing angst is that growth cannot be contiguous, rather the utilities must be extended to 590th Street. Discussion ensued on the complicated payback analysis. Mr. Schainker asked for clarification on the cost to use in the payback analysis. Council members agreed that $4.3 million should be used. Member Goodman said he feels it is very important to figure out the payback. Mr. Schainker said he hopes staff can come up with assumptions that Council can agree with. Member Wacha said something would be better than nothing. He suggested staff come up with assumptions, email them to the Council with one week to respond, then proceed with the analysis. Mayor Campbell asked if property taxes should be included in the analysis. Member Wacha said yes. Mr. Schainker wanted clarification regarding including jobs in the analysis. Member Wacha said he would like jobs included. Moved by Wacha, seconded by Goodman, to direct staff to perform a revenue analysis including water and sewer revenues, property tax revenues with industrial tax abatement, jobs, and sales tax if applicable, for a scenario with assumptions adequately articulated for this potential extension of utilities. Discussion continued. Member Larson said he is very reluctant to go through this time and time again, but realizes some Council members need the answers. Vote on Motion: 5-0.Motion declared carried unanimously. 2 Council Member Goodman discussed the second category of questions dealing with the need to develop safeguards to ensure that the land served by this infrastructure investment yields benefits beyond the direct financial payback. He said Council should be sure to get what it wants in terms of industries, and should reserve large lots and rail access for those that need it. Member Larson said the Ames Economic Development Commission (AEDC) has hired someone to draft a layout to make the area something that would sell. Mr. Schainker said that there are tools that can be used to accomplish the Council’s goals. Discussion continued regarding restrictions and goals. Moved by Goodman and seconded by Szopinski to again discuss category 2 (the need to develop safeguards to ensure that the land served by this infrastructure investment yields benefits beyond the direct financial payback) after the report from AEDC is received and before annexation. Discussion continued regarding requirements and goals for the area and land use. Vote on Motion: 2-3. Motion failed. Voting aye: Goodman, Szopinski. Voting naye: Larson, Davis, Wacha. Discussion ensued regarding economic development. STAFF REPORT REGARDING ELECTRIC ENERGY RESOURCE OPTIONS STUDY: Electric Services Director Donald Kom told the Council that Assistant Electric Services Director Brian Trower is leading this project. Mr. Kom said this will be a major project for Electric Services and the Resource Recovery Plant for the next couple of decades. Mr. Trower said that the study will look at energy resource options that Electric Services should be considering in the future due to Environmental Protection Agency (EPA) regulations that are targeted at burning fossil fuels for electric generation including fuel oil and coal. He said all utilities who have fossil fuel generators are facing the same regulations. He summarized the pending, anticipated, and recently enacted environmental rules that will impact the City electric utility in the future. Mr. Trower told the Council that staff has come up with 16 viable options, but is lacking the time and expertise to evaluate the options. He said a Request for Proposals was issued on March 21, 2012 to nine firms and six proposals were received. Mr. Trower said that three finalists presented day- long presentations and staff will have a recommendation for Council on May 22, 2012. Discussion ensued regarding the 16 options. Mr. Trower also said that the consultants were told to suggest and study other viable options. Council Member Szopinski asked if compliance issues are expected to arise with natural gas. Mr. Trower said as of now, natural gas is currently EPA’s fuel of choice and is exempt. Member Davis asked if Iowa State University (ISU) should be included in the study. Mr. Kom said ISU had a similar study conducted, but that ISU’s primary function of generation is heating and cooling, and the City’s primary function of generation is electricity. Mr. Trower added that ISU falls under a different regulatory process because the plant is under 25 megawatts (MW). Mr. Trower said the analysis will include capital costs, ongoing maintenance costs, and operational expenses for every option as well as a discussion of advantages and disadvantages for every option. 3 He said that conclusions and recommendations were not requested, so that staff will have the ability to make choices while adding intrinsic values to the process. Mr. Trower said that Resource Recovery is being included and considered in the study, since the outcome will affect what happens to Refuse Derived Fuel (RDF). Mr. Kom said this study is focusing on the energy side, and that there is an RFP going out from a Resource Recovery standpoint to look at what to do with Municipal Solid Waste (MSW). He said the options are to continue turning it into RDF, convert it to a gas, or do a mass burn. Mr. Kom said staff is seeking to understand the options under the time constraint. Mr. Schainker told the Council that the consultant won’t be asked to make a recommendation based on price since Resource Recovery must be considered. Discussion ensued regarding MSW options. Mr. Trower said staff does not not have a preconceived notion of what the results of this study will be. He said ideally the study would be completed by October. Mr. Kom said this study will help plan the course of the utility for the next 20+ years. Mr. Schainker said the study done a few years ago is outdated since many things have changed, and because of new regulations. Council Member Davis said that to meet the new regulations it could be very costly to users. Discussion ensued regarding natural gas and options for MSW. Mr. Kom thanked the Council and said a recommendation will be presented for them at the next City Council meeting. COMMENTS: There were no comments. ADJOURNMENT: The meeting adjourned at 9:18 p.m. _________________________________ _________________________________ Diane R. Voss, City Clerk Ann H. Campbell, Mayor ___________________________________ Erin Thompson, Recording Secretary 4