Will not impact electric rates, City Manager says
The City of Granite Falls moved forward with plans to replace two hydro-electric generating turbines at the Granite Falls Dam, as well as update associated Supervisory Control and Data Acquisition (SCADA) Systems Monday evening.
The vote appears to commit the city to the operation of the Granite Falls Dam for the duration of the 40-year life of the turbines.
According to City Manager Bill Lavin the investment can be made without a subsequent increase to city electrical rates.
In a 5-1 vote, in which council person Sarina Otaibi was the lone dissenter, the council voted to accept the low bid of Robert L. Carr Company, of Marshall, in the amount $1.346 million to replace the turbines. At the time of bond sale a contingency representing 12.5 percent of the bid, or $168,250, would also be included.
According to staff notes, the $1.346 million figure is below the Barr Engineering’s most recent estimate of $1.650 million, The company’s original estimate, provided in the first half of 2012 was $1.2 million.
In a unanimous vote, council members approved engineering services for the turbine and also for a new SCADA computer control and monitoring system for the electric utility , as well as engineering costs associated with the SCADA system replacement.
Turbine engineering services were awarded to Barr Engineering at a cost of $189,000, while SCADA system engineering services, not to exceed $10,000, were awarded to global engineering company, HDR, Inc. The SCADA system replacement was awarded to low bidder CG Automation.
Also on hand for the evening was Todd Hagen of Ehlers and Associates. In a unanimous vote, council members authorized Hagen to pursue the sale of $1.99 million in 15-year Electric Bonds to finance the project.
Hagen noted that by pursuing electric revenue bonds the city could avoid having to go through a public referendum that would be required if the city were to seek General Obligation (GO) bonding, although GO bonds typically have lower interest rates.
Repayment of the electric revenue bonds is financed by the revenues deriving from electrical generation at the plant as opposed to general city operations of taxation, etc. On the bright side, Hagen said that Electric and GO bonds are seeing similar interest rates at this point in time.
“Our analysts feel the bond could be sold with quite a lot of attention if I can get it out sooner than later,” Hagen said.
According to Ehlers and Associates estimates, the city is looking at a variable interest rate of 2.4 percent in yearone of the bond that would grow to an estimated 5.45 percent in year 15. Total interest over the 15-year life would come $1.191 million, for a total project cost of $3.187 million. The city’s debt service would increase from $2.65 million to $5.64 million.
Despite the costs, City Manager Bill Lavin informed the council that the city could avoid an increase to electric rates by re-allocating dollars available in other funds that would help avoid greater interest rates as well as serve to pay down the net increase to the debt service of $130,000 per year.
“As of right now, we have enough revenue to cover the difference which means no increase in electrical rates,” he said.
The Granite Falls council will open and award bids for the sale of the bonds at a November 4 meeting.
Said councilman, Steve Nordaune, “I think our staff needs a pat on the back for being able to look into the future and save some money.”
In other news:
•At the recommendation of the EDA, council members approved a 10 year, $100,000 loan request at three percent by Granite Redi-Mix that, coupled with private and bank financing, would fund the reconstruction of the current redi-mix plant at an estimated total project cost of $450,000.
•Council voted to commission Barr Engineering to complete a revised dam break analysis and inundation mapping at a cost not to exceed $21,300.
The analysis is mandated the Federal Energy Regulatory Commission (FERC) and would include the impacts of the river upstream of the recently removed Minnesota Falls Dam. There is also the potential for the Granite Falls Dam to see a reduced hazard rating which would free the city from some FERC requirements obligated now.
•After calling for bids at the previous meeting, council members approved the high bid of 60.10 per acre from Alvin Berends to lease approximately 60 acres of hay land located in the city’s Industrial Park.
•Council approved the lone bid of Minnesota Valley Tree Service in the amount of $90,000 for trimming of the city’s electrical distribution system as well as $16 on a per inch price for diseased elm tree removal.