HomeMy WebLinkAboutTB Minutes 1990-11-20 TOM OF ITHACA
SPECIAL TOWN BOARD MEETING
November 20 , 1990
At a Special Meeting of the Town Board of the Town of Ithaca ,
Tompkins County , New York , held at the Town Hall , 126 East Seneca
Street , :Ithaca , New York , on th 20th day of November , 1990 , there
were :
PRESENT : Shirley Raffensperger , Supervisor
Patricia Leary , Councilwoman
David Klein , Councilman
Frank Liguori , Councilman
Catherine Valentino , Councilwoman
ABSENT : John Whitcomb , Councilman
Karl Niklas , Councilman
ALSO PRESENT : Dan Walker , Town Engineer
Noel Desch , Bolton Point
Ted Wixom , Bolton Point
PLEDGE OF ALLEGIANCE
The Supervisor led the assemblage in the Pledge of Allegiance .
DEMAND SIDE MANAGEMENT PRQTECT FOR BOLTON POINT
Noel Desch stated that the RFP that NYSEG has put out has a rather
formidable set of documents . Among the factors that they have in
there is an economic risk factor , this is an economic risk to them .
He stated that Bolton Point scored very high on the economic risk
factor . He went on to say that among the type of projects they
will look at they will get a wide variety of things from the
manufacturers of electrical term storage equipment , hot water
heaters , .industrial concerns that will be interested in changing
their shift hours , all kinds of things . They are interested in
economic risk , they are interested in performance assurance that
whatever is going to be operating will perform in accordance with
what we say in the bid . They are interested in customer relations
factors , Environmental factors . Being the type of operation that
we are , we score extremely well on all of those because obviously
we are a service operation . All of those factors will be on the
positive s:ide because environmentally it is a lot safer to build a
couple of storage tanks than to build a power generating plant .
The customer relations aspect is very straight forward , NYSEG gains
because they don ' t have to talk with 25 , 000 customers to get the
same benefit .
Councilman Liguori asked , you are competing against who , other
places that are using large blocks of power?
Mr . Desch replied , in part . When we went to the workshop , NYSEG
has something like three or four workshops and they sent us a list
of all the participants in the workshop , and they included things
like schools , industries , manufacturers . It is very hard to get a
profile of what kind of mix they are likely to get in the way of
bids . The minimum energy gain that you can put in a bid is 100 kw
of demand power so that excludes some of the smaller manufacturers
Town Board Minutes 2 November 20 , 1990
who might have a small line of equipment . It is very hard to tell
if this whole adventure is going to be successful or not , he
thought from reading their costs in relation to what other peoples
costs will be to install equipment to accomplish the same amount of
energy gain or energy shift , are quite modest . So he felt from
that standpoint they will probably compete very well .
Councilman Liguori remarked , you are not competing on a price basis
your competing on a program that they are offering ?
Mr . Desch replied , there is a whole list of criteria as to how they
will rate these evaluations and they have a different level of
score for one factor versus the other . Their cost will be a
significant factor . Obviously , if the sponsor is paying for 100 %
of the cost you will get an extremely high score on the price end
of it but you might get a low score on the economic risk or zero
for that matter . In a sense you are competing on price .
Interestingly enough one of the concerns we had was what happens
during negotiations . They have a formal negotiating period after
they announce the initial award group , and one of the issues is do
they try to cut their share of the bid in relation to your share .
The way the bid is structured , there are not negotiations on the
price bid . So if we go in with our figures , roughly a million
eight , that would be their share and our share would be the same .
That is not negotiable , that ' s the fixed figure and they say we are
successful in the initial award group they won ' t try to negotiate
that down to a million seven or a million six . Now they might try
to argue on our numbers as to how much energy we say we are going
to be able to shift to night time operations . He stated that he
could imagine that happening because we are trying to make it
conservative enough so that we don ' t have a problem from an
operational standpoint .
Mr . Desch went on to say that the announcement took place in July ,
we have been to these workshops and Lozier ' s have been working to
identify what facilities we would need in order to accomplish all
this energy shift during the off-peak period . The deadline for us
to get the bid in is January 2nd . Lozier ' s is working on the final
draft of their report which will pin down the number precisely .
They and we , at this point , are very confident that the number of
three million seven hundred fifty will be a firm number . The pay
off period is fifteen years , that ' s the reason he had laid it out
on the sheet . Everything in the way of debt under the current
borrowing will disappear in 1996 . If we are successful and if
everyone goes along with this as being a good idea , the
Commission ' s share of the new capital project will be a of $ 230 , 000
a year which is reflected in the tailing off line to the right of
the page . Our current benefit assessment of $ 250 , 000 could be
stepped down to $ 230 , 000 and obviously there would be a major
reduction in the water rate with respect to the fact that this debt
that is in the water rate would no longer be needed . If we are
unsuccessful in getting the bid with NYSEG we can expect to come
back with bonding authority to accomplish the same improvements but
our costs will be more like the dash line up above . In which case
there would be a component of debt in the water rate that would be
required , should that happen . As far as the sharing of the costs ,
the reason he gave the Board a table in the back with respect to
next years benefit assessment is to show that in approximate terms
if you took , instead of it being $ 250 , 000 , if you took $ 230 , 000 the
shares of cost between the municipalities would be slightly lower
than what you see here . In other words , the Town of Ithaca instead
of being $ 132 , 000 to $ 133 , 000 would be more like $ 120 , 000 . There
is also goring to be some slight shift in percentages because as you
project out the growth in the different municipalities in water
it ' s quite likely that the Town of Lansing will continue to grow as
far as water use is concerned , a little higher as well as the Town
Town Board Minutes 3 November 20 , 1990
of Dryden who are planning sane additional districts , etc . If we
are successful , what you will see when we cane back is roughly
these numbers with somewhat of a shifting . Probably Cayuga Heights
going down , the Village of Lansing going down a little , the Town of
Ithaca probably staying the same because it takes a lot of water
consumption to make much of a shift in the numbers . In terms of
the budgeted amount for benefit assessment it will be roughly like
you are experiencing now, probably something like $ 10 , 000 to
$ 15 , 000 lower . He stated that he had done sane projected water
growth that show that probably now as the current percentage , for
example the Town of Dryden is 3 . 475 , one could expect that to go up
to 6 % . The Town of Lansing is beginning to level off , they are at
8 . 6 % and probably will go up to 10 % . The Village of Cayuga Heights
would probably go down to 9 % from 120 , the Village of Lansing would
probably go down from 22 . 7 % to 22 . 0% and the Town of Ithaca would
go down very slightly .
Supervisor Raffensperger remarked that one of the things Mr . Desch
had said was that many of the improvements included in this are
ones that will have to be made in the future anyhow and this is an
opportunity to have some cost sharing from NYSEG . She asked if
that was true of all of the elements of this ?
Mr . Desch replied that like anything else there are ones that are
more critical and the Town Engineer Dan Walker could probably tell
the Board ,, from the standpoint of the Town , a little better than he
could . Lozier ' s has done an assessment from the standpoint of
storage throughout the system and the Burdick Hill Road tank is the
critical tank in distribution network since all the other tanks in
the system are supplied by it . The only area served by gravity by
the Burdick Hill tank-, is the Oak Crest district . A sustained
interruption in the supply to this tank would produce disastrous
consequences to the entire area . There are a number of problems ,
one is that the average daily demand of the system is like 2 . 3
million gallons a day . Burdick Hill is a 1 . 5 million gallon
storage , the actual usual capacity , according to Lozier ' s , is
something like 1 . 1 million . There are also frequent days when the
demand goes to 3 . 3 million gallons . If you do have a problem at
the plant you really don ' t have any time to get back on line , you
will depressurize the system fairly rapidly . Furthermore , there is
no way to take the Burdick Hill tank out of service for painting
which is a three to four week period . So fran the Burdick Hill
tank standpoint , that ' s absolutely critical and will have to be
dealt with in the near future by the Commission .
Mr . Desch went on to say that when they first started out in this
exercise they were looking at the placement of one sufficiently
large tank on each hill to take care of this deficiency . Since the
original project was cut back by about a million dollars , basically
we have the Oak Crest pump station pumping against a dead end , the
pressure reducing station at Pearsall Place . So that wastes a lot
of energy and there is a lot of wear and tear on the pumps . So
both the past needs and the needs to stabilize the system suggests
that we not build one big tank at East Hill but rather build two
tanks at roughly the same storage , one on East Hill and one on
South Hill . South Hill is important because of the largest user in
the entire system , namely Ithaca College . Probably within a five
and certainly less than a ten year time frame the reliability of
the Commission system is going to be at risk if we don ' t provide
the capital improvements .
Town Engineer Walker remarked , you stated that the Burdick Hill
tank has a pretty limited service area as far as supplying by
gravity other than the Oak Crest pump , he asked what was the basis
for putting another million and a half storage there , wouldn ' t it
Town Board Minutes 4 November 20 , 1990
be better to have it higher in the system for reliability purposes ?
Couldn ' t the system be made to run with a half million storage ?
Mr . Desch replied , for a short period of time you probably could .
Lozier ' s looked at placing the new tank at a slightly higher
elevation than the Burdick Hill tank just for that purpose , the way
the pressure zone to the North is set , that even if you raised the
Burdick Hill tank it still would not change the need to have the
higher pressure zones in the Town of Lansing . Part of the problem
is we will be doing all the pumping and treating in nine hours .
That is the reason they are suggesting that the Burdick Hill
capacity be 3 . 3 million gallons . The raw water pump station , the
treatment plant including both the treatment process and the
pumping out of the clear well to Burdick Hill , the drawing of the
water out of Burdick Hill water tank with the Oak Crest pumps into
the new storage tanks will all be done in a nine hour period , from
10 : 00 P . N.I . to 7 : 00 A . M . to take advantage of the off beat rate .
One of the problems with the Oak Crest pump station , the proposal
here , is to increase the pumping ability there in order to fill
those two new tanks and in a nine hour period you would have to
totally replace the pump station that is there and then that causes
a problem because you have the transmission main that goes under
Six Mile Creek that has a maximum design pressure of something like
350 PSI and if you did that you would end up with a pressure at
that point that would exceed that . There is a happy medium , where
YOU increase the pumping capacity at Oak Crest , you can fill those
two new tanks in eleven hours so what we are putting in this bid is
the fact that 9 / 11 ' s of the power that will be needed will be done
on an off-peak basis , 2 / 11 ' s will be done on peak . The major
benefits to all of the Bolton Point participants , not only in
roughly $ 100 , 000 in energy savings but just the reliability that
you gain . One of the things they have been looking at is what
happens if you have a major power failure and your plant is down
for a couple of days , right now they would not be able to operate .
Basically with this level of storage going from less than a days
capability to probably more like three and a half to four days .
Councilman. Liguori asked if they had plugged anything into this on
the probability that down the road the City of Ithaca might not
want to rebuild their plant?
Mr . Desch replied no , you can ' t , it doesn ' t have an effect . What
would happen if the City formally approached the Commission
tomorrow, what would we do with respect to these numbers here?
They wouldn ' t change . What would happen , he expected , is that that
additional load would be done on on-peak basis . Of course , studies
would have to be done first . What we are looking at and the
feature of the bidding process is that you are looking at current
load that you can shift to off-peak , not future . The additional
load , coming from the City , that could be shifted would be
relatively small because you are already committed to a block of
power , that means you are running on a steady basis during an
off-peak basis and you aren ' t going to be able to add much more to
it unless you build another additional bunch of storage tanks .
Councilman Liguori asked , what are the odds that your proposal is
going to be accepted?
Mr . Desch replied , that he wished he knew . The Commission scores
just about highest on all of these other factors that will be
difficult for other entities to do just by the nature of the
business we are into . In other words , our customers are already
out there and NYSEG knows we are going to be in business fifteen
years from now . That ' s a risk with the others that they have to
weigh .
Town Board Minutes 5 November 20 , 1990
Councilman Klein remarked the available funds fran NYSEG , assuming
that they award , they share it?
Mr . Desch replied , the Commission would borrow the hole three
million seven hundred fifty thousand dollars a year , the maximum
full debt service on that is sanething like four hundred sixty
thousand a year . The Carunission funds would provide half of that .
What we built into the bid is that NYSEG on January first of each
year would pay their $ 230 , 000 so that we could invest that up to
the period we had to make our interest and principal payment during
the year .
Councilman Klein asked , might NYSEG change their contribution ?
Mr . Desch replied no , the negotiations exclude that . Are you
saying they might want to pay it all up front ?
Councilman Klein replied no , maybe they want to pay less than half .
Mr . Desch replied , that ' s not negotiable once the bid is accepted .
On the down side , they might reject the bid because it ' s either
structured in a way they might not want to do it or because it ' s
more than they might want to pay . But the scoring doesn ' t indicate
that that is the case . If you look at the bid cost in relation to
avoided cost we are less than their avoided cost by a canfortable
margin so we should be all right .
Councilman Klein asked ; what if the bids came in at four million
instead of three and three quarters , are they still basing it on
the original estimate ?
Mr . Desch replied , they would agree to exactly what we put in , they
would match it . There are a few tricks with that , with the
maturity schedule that we are going in with , we want to make sure
the interest rates don ' t cane in a lot higher than we are putting
in for . Since it is a fixed bid the Canmission would end up having
to pick up that margin so that is why we are using 7 1 / 4a interest
for 15 years which is a relatively short borrowing .
Councilman. Klein asked , are you ccmpeting against a total limit of
capital projects , is it a dollar limit or just the top so many?
Mr . Desch replied as far as he knew the only limit was on the
minimum amount of energy that you are including , it has to be more
than 100 kw .
Councilman Klein replied , but they haven ' t said they were going to
finance two projects or twenty projects ?
Mr . Desch :replied no he didn ' t think so but he might be remembering
wrong . There are about five pages of criteria that they are
looking for in there because he wanted to make sure they weren ' t on
one end or the other and likely to fall out because we were either
too big or too small , or whatever .
Councilman Klein remarked that he just wanted to make sure that if
we went for it that there was obviously a good chance , it ' s one
thing to score well but find out that they are only going to
participate in one out of forty projects .
Mr . Desch replied that he had been through the calculations about
seven or eight times and he knows what happens if you try to go
much higher your score drops off pretty rapidly as you approach
that balance between award cost and bid cost . For example , he
tried to put in 100 % of the interest during construction cost on
NYSEG ' s share because that ' s when we are in an overlap period
Town Board Minutes 6 November 20 , 1990
between the completion of our current debt and the start of the new
debt but it doesn ' t work . You lose a score rather rapidly .
Councilwcmian Leary left the meeting , at this time .
Supervisor Raffensperger remarked , in that overlap period , as she
understood the material she received , you do not anticipate that
there will be any increase in the benefit levy or the water rate
charge to the Town?
Mr . Desch replied , that is right .
Supervisor Raffensperger replied that she did want to mention to
the Town Board that the financial plans for both the ' 87 and ' 89
water extensions in the Town anticipated a drop off in the benefit
charges fran Bolton Point . Under this proposal it would not
happen , therefore , our individual charges per unit would have to
accommodate all of the capital improvements instead of part of them
being off::)et by the decrease in the Bolton Point benefit levy . So
that will have a financial impact on the Town .
Councilman Klein remarked that what Noel Desch is saying , absent
doing these improvements , the Town would be faced with
participating in other capital projects .
Mr . Desch remarked , the incidence would probably be greater .
Supervisor Raffensperger stated that she was just saying that in
reading the financial plans for the ' 87 and ' 89 water , when we were
given the information about how we were going to pay for it , there
was an assumption in there that the benefit levy from Bolton Point
would drop off . There was no consideration of this kind of a
project or any other capital improvements .
Councilman. Klein asked , so then would there be a significant
increase ?
Supervisor Raffensperger replied , there would be an increase in the
charges to Town residents .
Councilman Klein remarked , because they are going to be burdened
with the new 187 , 189 capital projects and they won ' t have the fall
off of debt to offset , so we are going to see in two years , quite a
peak .
Supervisor Raffensperger replied , it isn ' t going to be just a two
year because that decrease in the benefit levy presumably went
through a long period so it was an integral part of how do you pay
for the ' 8 '7 , 189 water improvements .
Mr . Desch :remarked , the only thing about that is that in 196 , once
the current debt is paid off , you ' ll get that portion of the debt
that ' s included in the water rate back so there will be a water
rate decrease . A person who is a user , won ' t be able to figure it
out , but they will see that there is a wash between the two . He
stated that if he happened to be the owner of a piece of vacant
property who was paying benefit that doesn ' t use any water he would
not see that wash take place .
Councilwamui Valentino remarked , before this plan was put together
how were we allotting in the budget for any capital improvements
that needed to be done down the road?
Supervisor Raffensperger asked , for Bolton Point?
Councilman Valentino replied , yes .
I
Town Board Minutes 7 November 20 , 1990
Supervisor Raffensperger replied , the Commission was not at that
point .
Councilman Valentino asked , we weren ' t anticipating any capital
improvements or we were just ignoring them?
Mr . Desch replied , there has been anticipation of a lot of capital
improvements the only problem is , when do you do them? The idea
was that they have been trying to hold off until the current debt
was paid off in 1996 . If the NYSEG thing doesn ' t cane through he
was sure that that was what was going to happen . But with the
NYSEG thing you have to be in operation November 30 , 1994 with the
improvements so you can ' t avoid that roughly two year overlap .
Councilwoman Valentino replied , the other alternative was that
there wouldn ' t be any capital improvements until after this debt
and then -we would have to start over again ?
Councilman Klein remarked , after 1996 .
Mr . Desch added , after ' 96 and then you would pay the full shot .
Councilman Liguori remarked , if those extension pay off in terms
that we get more custoners . . . . . .
Supervisor Raffensperger added , that ' s pretty hard to cane by . We
are not picking up enough units to pay the cost .
Mr . Desch remarked , in 1997 the Town water debt falls off quite a
bit but you got to get there . You are going to have a couple of
years that: could potentially cause that to increase .
Supervisoz. Raffensperger replied , for example in the ' 87 financial
plan it was assumed that $ 15 . 00 per unit would come from a fall off
in the Balton Point benefit levy . Now that ' s $ 15 . 00 that if this
goes through will not fall off . In other words , $ 15 . 00 more will
have to be charged . She went on to say that what the Board is
being asked to do today is , however , to authorize Bolton Point to
submit a bid . This does not mean that if what cotes back in this
whole process doesn ' t make financial sense to the Commission or to
the Town .Board of the Town of Ithaca that we must proceed , she
asked if this was right?
Mr . Desch replied what will happen is , if NYSEG should award the
proposal then the Commission and the municipalities have another
decision point to say it is a go or a no go and here is the
structure of the debt taken on at that point . There is a date of
March 6 to notify NYSEG if they want to accept . You will have an
opportunity to look at the breakdown before the final acceptance .
Councilwoman Valentino asked what kind of costs were being incurred
to put this proposal together ?
Mr . Desch replied , other than out of pocket operating costs , the
only real cost are Lozier ' s study and that is a $ 25 , 000 cost . So
in a sense that is the cost of developing the proposal . There will
be some Commission legal costs to put the amendments to the
agreement together but not a very large amount .
Councilman Klein remarked , so we will have a chance to evaluate
Lozier ' s full report . . . .
Mr . Desch added , as well as the structure of intermunicipal
agreement and the sharing of the costs .
Town Board Minutes 8 November 20 , 1990
Councilman Klein replied , if we decided it was not as beneficial ,
at that point , as it seems now we could end it .
Councilman Liguori remarked , the alternative that you suggested , if
everything falls through with NYSEG that is a completely new issue
and will be re-evaluated sometime later on .
Mr . Desch agreed . He went on to say that if you stretched it you
probably could get away with not painting Burdick Hill tank until
1997 , but we would rather not if we can avoid it .
Supervisor Raffensperger noted a draft resolution in the back of
the material . She stated that she only had one possible correction
that being in the third paragraph where it says " the SCLIWC has
received the engineering report " she noted that it was only
preliminary and she would like that corrected .
RESOLUTION NO . 209
Motion by Supervisor Raffensperger ; seconded by Councilman Liguori ,
WHEREAS , the Southern Cayuga Lake Intermunicipal Water Commission
on August 1 , 1990 , filed a notice of intent to submit a Demand Side
Management Project to NYSEG involving the construction of off-peak
production and transmission facilities that would be necessary to
enable the CcnT ussion to utilize 900 KW demand and 3 , 116 , 600 KWH of
annual energy during off-peak periods for a nominal contract period
of 15 years , and
WHEREAS , the SCLIWC retained the firm of Lozier Engineers and
Architects to prepare an engineering report defining the cost of
facilities required and among other things assessing the risks of
operating production and/or transmission facilities during off-peak
periods , and
WHEREAS , the SCLIWC has received the preliminary engineering report
and evaluated its findings and by resolution adopted at its regular
meeting on November 8 , 1990 recommends that the parties to the
intermunicipal agreement authorize the Commission to submit a bid
in accordance with the project description specified in Appendix A ,
NOW THEREFORE BE IT RESOLVED , that the Town of Ithaca hereby
authorize the Southern Cayuga Lake Intermunicipal Water Commission
to submit a bid for 900 KW of Demand Side Management in accordance
with the description 'in Appendix A , subject to the following
conditions .
The bid shall state as one of its conditions the following .
Negotiations and arrangements for Comssi
mi on member cost sharing
will occur- following initial award group notification by NYSEG
including public hearings to consider the specific amendments to
the i.ntermiunicipal agreement . The Commission will be the lead
agency for the preparation of such amendments .
(Raffensperger , Klein , Liguori and Valentino voting Aye . Nays
none ) .
ASSOCIATION OF TOWNS MEETING
Supervisor Raffensperger noted that the Association of Towns had
sent the notice of the February meeting of the Association of
Towns . We would very much like to get our reservations in early .
She stated that she was sorry more Town Board members were not here
but they would be called . What she needed to assess was which Town
Town Board Minutes 9 November 20 , 1990
Board members wished to go to the meeting this year . It will be
held February 17th to the 20th , as usual .
Councilwc:man Valentino stated that she would like to go .
Councilman Liguori asked the Supervisor how she was planning the
meetings ?
Supervisor Raffensperger replied that she thought that if you went
every couple of years it was worthwhile . She went on to say that
she had riot gone in a couple of years because she thought that if
you went a couple of years in a row it feels as if it was the same
meeting but if you go rather infrequently it feels as if you really
do pick up some very interesting information .
Councilman Liguori asked if they were always held in New York ?
Supervisor Raffensperger commented that there have been some
complaints about that because it is so expensive and they say it is
the only place where there really are enough hotel rooms for as
many people that cam . The Supervisor asked the Board members if
they would like to express their desire to go . She went on to say
that if we get too many people she would have to say we will have
to give preference to those who did not go last year .
Councilman Klein and Councilman Liguori expressed interest in
attending the Association of Towns meeting .
ADJOURN MIT
The meeting was duly adjourned .
Town C erk