At their work session on June 5, the Salida City Council (SCC) heard presentations on the ten-year financial management plan (FMP) from Bruce Kimmel, Senior Municipal Advisor for Ehlers-Inc., and from the architectural team for the new fire station on energy system alternatives.
Kimmel ran through projections for the General Fund and Capital Fund, noting that the General Fund balance would be decreasing for the next few years because of transfers to the Capital Fund, but “should rebuild in 2026”. He also noted projections of small sales tax increases as well as step increases for operating (personnel) costs.
For capital improvements, he noted that the fire station was going to be the biggest investment, with bonds funding a possible 16 million dollar project, then more bond financing possible in fiscal years 2027 – 29 for other projects such as sports and recreation centers, noting that a “half-cent sales tax increase” would likely be necessary to pay for these other projects.
“Cost of living has gone up so much here,” said Mayor Dan Shore: “To stay competitive we need to look at pay scale [for personnel]. That may be a bigger priority than projects – what good are projects if we don’t have people to run them?”
“That’s a good point,” Kimmel replied. “This isn’t a static projection, it’s not a crystal ball; your staff and elected officials are going to need to keep looking at it in the late 2020s. Capital projects are getting more expensive. We are counting on more growth in the city and possibly a new sales tax increase to help pay for capital projects. The fire station project is a big lift – you need to have confidence in your ability to raise the money for the project – but we’ve been conservative in our estimates of revenues (low-balling) and [assertive on] expenses (high-balling), and I think you can do this.”
“I expect that some of this is going to have to come back to the voters,” said Shore. “People are going to have to decide [balance their wants against what they are willing to pay for.] I love all the grassroots energy – but because of our financial limits we need to put some of these projects on the ballot.”
Kimmel agreed: “You can afford to do the essential – the fire station. It will be a big lift but you won’t be scouring the piggy bank – then after that, you can go to voters and ask for a revenue increase.”
“The financial work you’ve done since the last FMP is really remarkable,” Kimmel concluded: “So whenever you decide to go to the fire station project, you won’t have any problem getting bonds. Investors will be lining up for this project. The bond market outlook is pretty strong, I don’t see any problem with you getting the funding you need.”
Next up came the team from Neenan Archistruction, along with Fire Chief Doug Bess, to give an update on the energy system alternatives for the fire station. Tim Stern, the pre-construction manager, Seth Clark, the chief architect, and Donna Smith Neenan’s Vice-President of Business Development, said they were “looking to get some clear direction” from the SCC on which system to plan for.
Originally, the city had hired a consultant to plan and design a “green” geothermal system to power the station, but, as Clark explained, “We did a test bore last month and we are going to have difficulties. The water table interference is at 200 feet and collapsed the bore. The geology of the site is cobble (rock fragments larger than pebbles but smaller than boulders)…it’s going to be cost prohibitive to do geothermal so we are looking at alternate energy systems.”
Clark noted that the station is planned to have a rooftop solar array, with possibilities for other arrays, such as parking area canopies and over the retention ponds. “The consultant with Ehlers talked about Inflation Reduction Act money available to local governments for solar arrays – I will work with your team to help you with that.” He then laid out the alternatives to the geothermal system.
Alternative #1 would be an all-electric system, with a boiler, but, Clark noted, “we would need to look at other options, like a heat pump, because electric boilers aren’t as efficient as gas boilers.
“A [back up] generator has already been purchased,” Bess added. “We got a good deal on one that has been decommissioned elsewhere – but if we have more electrical load, we have to shuffle things around that can be put on the generator.” The generator was the project schedule’s “critical path” item with a lead time of over 22 weeks. Making an early purchase ensured that it would be on hand when needed for installation; however, not being able to handle the full station’s all-electric load in an emergency was said to not be acceptable to Bess.
Alternative #2 would be a hybrid electric/gas system, with no in-floor radiant heat, but overhead gas heaters in the apparatus bay and an air-cooled Variable Refrigerant Flow (VRF) system serving the living quarters and administrative section: “Capital costs and operating costs come down,” Clark said.
Alternative #3 would be an all-natural gas-fed system.”
The team then went through budget comparisons among the three systems, showing that both upfront and utility costs would be highest with the all-electric system, with monthly costs ranging from $2,000 in winter months to as high as $12,000 per month in the summer.
“Do you have some annual figures for utilities?” asked Treasurer Merrell Bergin. “That would help because we mostly look at yearly figures [when budgeting] for utilities.” The Neenan team then agreed to provide annual figures based on the model they had received.
“I like overhead gas heat for the bays, it thaws equipment faster,” said Bess. “I respect the climate action plan [that favors an all-electric system] but sometimes you have to deviate from the plan – I like the hybrid system.”
“I’m a big fan of the Climate Action Plan but I can’t stomach the cost of the [all] electrical system,” said council member Harald Kasper.
“With a hybrid system can we go one way or another as things evolve over the years?” asked member Alisa Pappenfort. “It would help,” said Stern: “Even an all-gas system could be adapted – electric radiant heat is way more expensive than natural gas but it’s coming down.”
“Do you feel like we’ve given you direction?” Shore asked the team. “Not really,” said Smith initially: “Let me summarize – you’d like us to try the hybrid option but limit the natural gas to heating the bays.”
The SCC concurred with the summary, after some further discussion, which included the possibilities of seeking additional grant funding and the hope of construction pricing coming down in the future: “We don’t typically see prices coming down,” said Smith in answer to a question from Kasper. “The faster we can get under contract, the better off we’ll be – our goal is to get back to you in September and hopefully break ground this year.”