FINANCE COMMITTEE

September 15, 2008

Minutes

Councilors: Blanchette, D’Errico, Farrington, Gratwick, Palmer

Staff: Barrett, Cyr, Cammack, Little, Dawes, Warren, Ring, Wardwell,

Hupp

Others: Jim Lucy, Bob Marcotte, Steve Hughes, Jerry Livengood,

John Kunz

1. Consent Agenda

A motion made and seconded to approve the Consent Agena items. Gratwick asked about the $3,500 stipulation in Item a), and Cyr said it is arranged through the closing attorneys.

a. Lien Payment and Quitclaim Deed – Cousins – 85 & 87 Holiday Park

b. Quitclaim Deed – Goodwin – 450 Ohio Street

2. Bids/Purchasing

a. Front End Loader – Fleet Maintenance – Nortrax - $168,500

Cyr said this is part of the annual fleet maintenance replacement. The loader to be replaced is five years old and is being sold back, in a similar fashion as to what is being proposed for the new item. 5 bids were received and the recommendation is to the low responsive bidder, Nortrax of Hermon, for a life cycle cost of $93,500. The actual cost is $168,500 but the City asks for a guaranteed maximum total of the City’s repair costs over the five year period. The City will be responsible for none. The guaranteed buyback price by Nortrax at the end of the five-year period is $75,000. Beauregard Equipment had a lower net cost but it did not meet bid specifications. Blanchette spoke about the buyback practice and the fact that it saves taxpayer money. A motion was made and seconded to approve recommendation to the full Council.

b. Toner Cartridges – City Wide – WB Mason - $50,000 approx.

Cyr noted that this item had been previously discussed at a Finance Committee meeting with a recommendation of award to The Tree House, Inc. Subsequently, staff found that The Tree House was not able to honor their original pricing as the pricing proposed was not per item. Based upon the revised pricing, staff redid the bid tabulations and WB Mason of Saco, Maine was now the low bidder. WB Mason will honor their prices for the next year. In the interim, the City did not sign a contract with The Tree House and they have been informed of the City’s change in vendor. A motion was made and seconded to approve staff’s recommendation.

c. ¾ Ton 4x4 Utility Vehicle – Fire Department – O’Connor - $35,344

Cyr said this is referred to as the Command Vehicle and response to all calls. The replacement is part of the Fire Department replacement plan. The 2007 Homeland Security money was targeted for this replacement. 3 bids were received and the recommendation is O’Connor, the low bidder. It is important to note that additional expenses estimated at $9,000 will be incurred to put the vehicle into service. The appropriated amount for this purchase was $45,000. Responding to Blanchette, Cammack said the unit to be replaced is 10 years old, and it will be moved to the SRT Team. In response to Gratwick, Cammack said other state departments use the same type of vehicles because of the amount and size of needed equipment. In prior years, this equipment was not available. The older vehicle has 60,000 miles but it idles a lot and the hours used are looked at more so than the actual mileage. Blanchette noted that times and needs change over the years in terms of necessary equipment. A motion was made and seconded to approve staff’s recommendation.

d. Rehab Engine 2 – Fire Department – Green’s Auto Body – up to $20,000

Cyr noted that the City has three front line engines and one reserve engine, which is a 1989 Pierce Arrow. The equipment needs extensive rust and corrosion repair work. This was anticipated in FY08 and funding was appropriated. Three quotes have been obtained. Staff recommends a contract with Green’s Auto Body at slightly over $11,000. Cyr noted that Green’s is owned by the family of a recently retired long-term firefighter. Staff asked for approval to go up to $20,000 in case other issues are found during the repair work. $34,000 is available within the budget. A motion was made and seconded to approve staff’s recommendation. In response to Farrington, Cammack said the price difference in the three quotes was in the hourly labor rates. Responding to Palmer, Cammack said the repairs should extend the life of the equipment another 10-15 years.

e. Request to Waive Bid Requirements – Public Works – Intersection Equipment for Broadway and Stillwater

Cyr stated that this is for traffic control equipment. This is part of a BACTS project 90% funded by the state and 10% by the City. The needed equipment is an Econolite controller, which is needed for compatibility on the Broadway stretch. Econolite is a sole source vendor for the equipment. Staff asked the Committee to waive the bid process in order to purchase the controller for $13,743. The second piece of equipment for this intersection is a Traficomm detection unit. Highway Tech is the sole vendor for this equipment and staff requested permission to waive the bid process to purchase the equipment for $11,400. Traficomm is compatible with Econolite. Responding to Gratwick, Wardwell said that most intersections have some sort of traffic detection equipment either overhead or loop underground. The latter is not as long lasting. Traficomm has been available for the past couple of years. It has been very successful at the Odlin-I395 intersection. Blanchette asked about the sequence of the light at Ohio/Griffin. Wardwell said the system is on detection. When the amount of traffic volume changes, the equipment sometimes might take a couple of cycles to catch up. A motion was made and seconded to approve staff’s recommendation.

f. Request to Waive Bid Requirements – City Wide – Stormwater Utility Study – CH2M Hill

Cyr said this relates to the City’s watershed management plan which requires certain actions on the part of the City. Part of the discussion during the FY09 budget process was the staff’s recommendation to set up a Stormwater Utility District to fairly assess for impervious surface in order to pay for costs associated with costs incurred due to Maine DEP compliance regulations. The City secured a $10,000 Maine DEP grant. Staff asked for approval to waive the bid process and to work with CH2M-Hill regarding the feasibility of setting up a Stormwater Utility District. CH2M-Hill did a similar study for the City’s CSO, and they are familiar with the City’s infrastructure and its billing system. The City’s match to the $10,000 grant will be in the form of staff hours. Gratwick asked if this relates to a specific policy. Barrett said the grant itself specified Birch Stream but will also look at transferring it to the City as a whole. Gratwick asked if the stakeholders are being included upfront. Regarding the Penjajawoc Stream, Barrett said the City was under strict DEP guidelines which required a shorter stakeholder involvement process than preferred. The initial stakeholder process led to raising the awareness of stakeholders that they needed to be more involved. This current process won’t be under a tight timeframe and he sees it as a beginning step towards moving to some sort of a drainage utility. Stakeholders will be involved and this is simply the first preliminary exploratory step that will help identify all issues to be addressed. Gratwick asked about the expected timeframe. Barrett said there will be a period of time when CH2M-Hill will perform the study. Ring said staff will provide information and the actual working time of CH2M-Hill should be two or three months involving staff and stakeholders. Barrett said at that point there will be a full public policy process which might take six months at a minimum. To implement a Stormwater Utility District, it will take 12-18 months or longer, Barrett said. A motion was made and seconded to approve staff’s recommendation.

3. Taxpayer Request – Lower Delinquent Interest Rate

Cyr said staff was approached by a taxpayer questioning why the City would set its interest rate on delinquent taxes at 11%. Historically, the City has always followed the maximum tax rate set by the State Treasurer. Mr. Gray asked the City to reconsider the amount in order to assist taxpayers during this difficult year. Dave Little surveyed 42 municipalities; 12 smaller municipalities have a lower rate than the state estimated maximum; municipalities with a similar size to Bangor and the neighboring communities follow the State’s estimated maximum rate of interest. Mr. Gray was not in attendance. A motion was made and seconded to approve staff’s recommendation to remain at the current level.

4. Taxpayer Request – Refund of Excise Tax

Little said that Mark Kitchen requested that the City refund him a portion of paid excise tax on a vehicle which he no longer owns. He was informed that under State Law there is not a refund provision. A portion of the unused paid excise tax is credited toward a new registration within the same registration year. Kitchen asked for his request to be considered by the City Council. Little explained to Kitchen that the Council has no authority to refund excise taxes due to the State Law. If approved by the Committee, the City would cut a check to Kitchen but staff does not recommend this avenue. Palmer suggested that the City’s policy should be posted in the Treasurer’s Department, and Little agreed. Blanchette expressed concern about a clutter overload of information on display. She feels it is not the City’s responsibility to post every State Law. Palmer feels it is important for the consumer to understand laws and for the City to be user-friendly. A motion was made and seconded to move staff recommendation.

5. Update on Fire Station 6 Project

Cyr provided background information. In 2005, the City authorized a $1.5M bond issue. At that time there were deficiencies at the existing Station 6 and the City was hoping to work with Husson College to identify a location. Husson updated its master plan and decided it was not in a position to make a decision. Cammack went to the School Board and asked for permission to locate the Station on their Griffin Road property. The Board agreed and asked the City to stay as close to the Kenduskeag Avenue side as possible. In May 2008, the Council authorized a design/ build contract with Barr and Barr for a new LEED certified station. Since June, all involved have been working to develop a site plan, detailed floor plan, and cost for the entire project. The proposal is to construct an approximately 8,900 sq. ft. station on the opposite side from the current station and down towards Broadway about 800 ft. The site plan has received Planning Board approval. The new station includes three extended apparatus bays, it will fit all of the current equipment with some extra room as well for future equipment. The building should easily obtain a silver certification level under LEEDs. The original 2005 estimated was $1.5M, but it is in excess of $2M. Staff asked for authority to enter into a contract with Barr and Barr for a guaranteed maximum of $2.2M. Cyr noted that this is not the total estimated project cost; i.e. 800 ft. of sewer line in excess of $100,000; staff will work with current vendors for apparatus bay appliances, compressors, etc. to obtain the best lowest price. The total amount to be paid by the City should not exceed $200,000. Cyr said the total estimated project cost is $2.4M although she doesn’t feel the final project will come in at that amount. In order to proceed, the City would need to authorize approximately $900,000 in additional funding. Cammack spoke about some of the details associated with the project. Barrett urged the Council to spend the necessary amount of money to correctly do the project. Blanchette spoke in favor of the new facility and talked about energy savings. A motion was made and seconded to approve staff’s recommendation.

Discussion continued, and Gratwick spoke about the need for a quality product and the LEEDs. In response to Gratwick, Cyr said the total out of pocket costs will not exceed $2.4M. There is no in-kind cost involved. A decision has not yet been made regarding the current site. If it were to be demolished, Public Works crews would do the work and the steel would be salvaged. Gratwick said he is distressed with the extra $900,000 and questioned the increase in size from 5,800 to 8,800 sq. ft. and the additional bays. Cammack said a fire engine, ladder, tanker and ambulance as well as the spare ambulance will be housed. The extended bays are 70 ft., and the bunk rooms are 12 x 7 ft. Palmer suggested using the current site for a storage area. Blanchette asked staff to seriously consider not removing the current Station 6 and agreed with it being used for storage. She asked the City Engineer to determine if the “L” could be removed from Station 6 and use it for storage. She noted that the former police department has not been demolished. Farrington asked staff to take Blanchette’s suggestion under advisement. Cyr indicated that an item for First Reading with a bond order will appear on the upcoming Council agenda.

6. Request to Tax Possession of Mobile Home

Cyr noted that the item is to take possession of a mobile home. David Little said that the owners have abandoned this mobile home. Code Enforcement has verified that the mobile home is both empty and uninhabitable. Given that the property has several matured liens, it is considered tax acquired and, after vacated for 60 days, the City becomes responsible for insuring the property and liable for any injuries or damages associated with it. This 60 day period will be up at the end of this month. A motion was made and seconded to recommend approval of a Council Order which will authorize staff to take possession and dispose of the mobile home. A third party will be hired for the disposition. The item will appear on the upcoming Council’s agenda for final action.

7. Discussion of Wood Chip/Natural Gas Heating Alternatives – Airport

Barrett discussed the memo which he had prepared for the Committee’s agenda packet dealing with the wood chip and natural gas heating alternatives.

Palmer spoke about the risks and expenses of the wood boiler that he didn’t see outlined in the prepared material. A building is needed for a wood chip boiler. One would be inside of a hangar. He spoke about maintenance needs, safety issues, staff time, and ash removal. For both the Airport and High School, trucks will need to deliver the product and not interfere with the operations of both facilities. He spoke about exhaust from the trucks.

Blanchette said the discussion is for the Airport boiler, not the high school. She has a problem with the City becoming dependent on another source empowering the company to set the prices. She thought trying wood at the Airport would be a better start because they deal with large vehicles anyway. She asked the Chair to focus the discussion on the Airport only.

Barrett spoke about the cost of natural gas being like electricity. There are two parts: the price of the commodity (deregulated) and the price of the delivery charge (regulated by the PUC).

Farrington noted that former Councilor Cashwell differed with the $55/ton vs. $80/ton. He asked how that would increase the cost of the figures. Barrett said that part of Cashwell’s concern is that he is aware of mills in the state that are paying $80/ton. He is concerned that if that is the case and if they are in fact shipping wood as far as over 100 miles to various mills that the City would be a very small user, that signing a contract for $40 and a mill paying $80 that the City might have great difficulties to get someone to continue to provide the price. Bob Marcotte spoke about potential paybacks.

Hupp said it is a difficult decision, and there isn’t a clear right or wrong answer in this situation. She would rather invest her personal money today if she knew the payback would be within 3-5 years as opposed to a longer time period. She feels that natural gas would provide a return in a relatively short period of time with improved efficiencies and cost savings. She would take a wait and see approach with the wood.

Blanchette said she doesn’t have a preference between gas or wood. She stated that she was not comfortable with deregulation of utilities.

Barrett said the oil market is totally deregulated. The wood market would be similar. With natural gas, the commodity pricing depends on supply and demand. The delivery charge for both gas and electricity has tended to be much less variable than the commodity charge.

Jerry Livengood of Bangor Gas agreed there are a lot of uncertainties. He spoke about the difference with deregulation of electricity than of natural gas. It’s worked for natural gas because it can be stored whereas electricity is generated on demand. Bangor Gas’ rate is 20% of the actual total delivery cost, and it can be locked in. Economic development coming into Bangor contacts Bangor Gas. He said the Airport is the gateway for Bangor Gas.

Jim Lucy discussed his philosophy on wood and said that Honeywell is not trying to steer the City in either direction. When Honeywell did their energy audit of some forty City buildings, the two largest load sites found viable for wood burning were Bangor High and the Airport. Lucy cautioned the Committee to look at fuel choice – gas or oil or wood in the mix – because history shows that the prices flip flop. Honeywell has recommended natural gas for ten sites.

Gratwick spoke about the longevity of the boiler. Lucy said it is a regular standard boiler with a different fuel delivery system with a recommended 25 year life cycle. Many exceed that amount of time. Marcotte said the proposed system has been around in excess of 20 years in the tri-state area with 50-60 installations.

Responding to Gratwick, Barrett said at some point the Council needs to make a decision on which direction to move forward. Although not necessarily tonight, a decision by the Council sooner would be better than later. Farrington suggested that the Committee needs to decide if it is competent to make a recommendation to the entire Council and, if not, possibly schedule a Council Workshop involving the entire Council. Gratwick favored the wood option for the Airport but said that diversity is necessary throughout the City. Palmer said he needs more time and education before making a decision. He spoke about the easy delivery of natural gas and its cleanliness.

D’Errico asked if the Airport Sheraton is on the natural gas system. Marcotte said the service line is in place and only needs to be connected. Hupp said that GE also recently converted to natural gas.

John Kunz of Bangor Gas said that diversification is good and he looks toward wind power. He said that Bangor has an opportunity to save the taxpayer dollars with a two year contract with natural gas. Take advantage of natural gas and see what happens with wood prices. There is no storage involved with natural gas.

Blanchette said she has spoken with the Finance Director regarding the pay off for a 2 year investment for natural gas at the Airport. She would like to discuss a lock in price with Bangor Gas. She said the City can’t afford to wait to have further meetings. A decision needs to be made. She made a motion to put before the Council the option of going to natural gas at Bangor International Airport in 2008-09. Palmer seconded the motion with the caveat that it could be hooked up this year. Barrett said that one of the Airport’s boilers can be converted and another needs to be replaced with a new natural gas fired boiler. Marcotte said the boiler might not be able to be in place before the heating season. Barrett said a partial conversion to natural gas could be done this year with a complete conversion in the spring.

Dave Shipley, VP for Energy West, who purchased Bangor Gas in December, spoke about natural gas for the City and its commitment to Bangor. Palmer said that all due effort should be made to go with the new boiler and to go all the way with the project. Waiting for April will miss an opportunity for this year.

Gratwick said the Committee is making a decision to move this forward to the next Council meeting. He would like to know when natural gas can go in, real costs to be amortized overtime, and maintenance costs for a wood furnace. Gratwick said he is not ready to vote at this time due to more information needed. Coombs said the gas is available and it only needs to be extended from the access road to the boiler room. It could be done within two weeks. Additional time would be needed for the four hangars.

Palmer said a course of action is needed. If the Committee recommends, the item would be on Monday night’s Council agenda. Barrett noted that Council Chair Hawes will be out of town on Monday. He said he would be willing to put together more information for the Council prior to Monday. He also noted that he will be out of town on Monday at an annual conference.

Blanchette again stated that the item needs to be on the Council’s agenda. If a quorum lacks at that meeting, it can be moved to a date certain.

Farrington called for a vote on the motion. It was 4 approving and 1 opposed.