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HomeMy WebLinkAboutR-5301 Authorizing the Use of Request For Proposals Procedures for Lease - Purchase Financing for The Stenner Canyon Hydroelectric ProjectRESOLUTION NO. 5301 (1984 Series) A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO AUTHORIZING THE USE OF REQUEST FOR PROPOSALS PROCEDURES FOR LEASE - PURCHASE FINANCING FOR THE STENNER CANYON HYDROELECTRIC PROJECT. BE IT RESOLVED by the Council of the City of San Luis Obispo as follows: WHEREAS, the City wishes to develop the Stenner Canyon Hydroelectric Project, and WHEREAS, lease - purchase financing is a viable alternative for funding the project, and WHEREAS, the City has successfully used lease- purchase financing of projects in the past, and WHEREAS, the City will be receiving formal construction bids for the Stenner Canyon Hydroelectric Plant and Penstock, and WHEREAS, the City has adopted policies and procedures for the purchase of goods and services pursuant to its powers as a chartered municipal corporation. NOW THEREFORE BE IT RESOLVED, by the Council of the City of San Luis Obispo as follows: 1. The City Council finds that the solicitation of proposals for lease- purchase financing of the Stenner Canyon Hydroelectric Project will result in a favorable rate of return for financing the project. 2. The Staff be authorized to proceed with the solicitation of pro- posals for lease - purchase financing of the Stenner Canyon Hydroelectric Project. On motion of Councilman Settle , seconded by Councilwoman Dovey , and on the following roll call vote: AYES: Councilmembers Settle, Dovey, Dunin and Mayor Billig NOES: None ABSENT: Councilman Griffin R 5301 Resolution No. 5301 ( 84 Series) Page 2 the foregoing Resolution was passed and adopted this 7th day of February , 1984. ATTEST: CITY ERK PAMELA V ES APPROVED: Q City Administrative Officer '• 111W _�il n 1. REQUEST FOR PROPOSALS The City of San Luis Obispo is requesting and will accept proposals for lease purchase financing of the Stenner Canyon.Hydroelectric Project. All proposals are to be in accordance with instructions and specifications contained herein. SUMMARY The City of San Luis Obispo is going to construct a 750 KW., hydroelectric plant and 20 inch diameter penstock referred to as the Stenner Canyon Hydro- electric Project. The estimated construction cost of the project is $1,550,000. It is conservatively estimated that the project will generate approximately $21,000,.per_month in revenue. This revenue, in addition to funds that have been reserved for this project, will be used to cover the cost of the lease purchase financing. All tax benefits may be assumed by the financing parties. GENERAL INSTRUCTIONS All proposals must comply with the following: 1. Proposals must be received by the city prior to 2:;00.P.M. on March-,8, 1984. They shall be submitted in a sealed envelope and be identified with the submitter's name, address, phone number, and the words, "City of San Luis Obispo - Stenner Canyon Hydroelectric Project Financing." All proposals shall be submitted.to the City Clerk's office. Any pro - posals received after the specified date and time will be returned unopened. All proposals will be reviewed by a project management subcommittee and referred to the City Council with a recommended course of action. 2. Questions concerning this RFP should be directed to Roberta Goddard in the Finance Department or William T. Hetland, Utilities Division. All questions requiring an interpretation of this request shall be submitted in writing. Responses will be provided in writing to all firms in receipt of this RFP. All questions must be received.not.less than five (5) working days before the deadline specified for the receipt of proposals. 3. Acceptance of proposals does not in any way obligate the city. The city reserves the right to waive irregularities and to reject any and all proposals. The comparison of lease purchase financing proposals will be based upon: (a) The effective rate to the City for the cost of the lease purchase funds based on proposed initial rate, repayment schedule, and terms. (b) The terms and conditions of the proposed lease agreement. (c) The experience and quality of the leasing firm. 0 0 G 0 z. Proposers may be asked to clarify or further explain, in writing, specific areas of their proposals. 4. Each proposal will contain the following: (a) A general description of the firm's organization and history,, including the background of the principal individuals that will be dealing with the City of San Luis Obispo. (b) The monetary specifics of the lease financing proposal including the term of the lease, the annual percentage rate, any expense payments and the number, amount, and timing of the lease payments. (c) The proposer shall include a copy of any standardized contract which it is currently using or would wish to use for this project. (d) Any additional information - necessary for City to properly evaluate the proposal. 5. Each proposal shall be for annual or semiannual payments. The term of the proposal shall be five (5) to ten (10) years. The city's preference is for a five (5) year period. 6. All proposals should be based on the estimated construction cost for the project. Actual bid amounts and contingencies will be used in the final financing contract. 7. All proposals submitted shall be valid for a period of sixty (60) days beginning on March 8, 198.4 (submission deadline date). 8. Any proposal may be withdrawn, by written request, any time prior to the deadline specified for receipt of proposals. The request for with- drawal shall be executed by the proposer or his duly authorized repre- sentative. The withdrawal of a proposal does not prejudice the right of a- proposer to submit a new proposal. 9. Proposals must be signed with the firm name, by a responsible officer or employee. Obligations - assumed by such signature must be fulfilled. 10. All proposals shall be typed or written in ink. Any corrections made by crossing out or obvious erasure shall be initialed by the person signing the proposal. 11. Failure to submit any of the required elements of the proposal may subject the entire proposal to rejection. C 3. STENNER CANYON HYDROELECTRIC PROJECT In 1980 the City of San Luis.Obispo had a feasibility study written for the development of a small hydroelectric facility. The study evaluated the tech- nical and economic feasibility of generating electrical power from the water flowing in the City's main water supply line. The project alternative the City is developing includes a 20 inch diameter penstock from the City's supply line and a 750 KW turbine- generator station with necessary controls and power transformer. The estimated cost of con- struction is $1,550,000. CONSTRUCTION CONTRACTS The Stenner Canyon Hydroelectric Project is composed of the following two construction contracts: a) Stenner Canyon Hydroelectric Project, Hydroelectric Plant - City Plan F -25C, January 1984 This contract is for the construction of the powerhouse including site grading and piping, furnishing, installing and testing of the turbine - generator and appurtenances; and all other electrical and civil work necessary for a complete and operational project. b) Stenner Canyon Hydroelectric Project, Penstock - City Plan F -28, January 1984 This contract is for the construction of approximately 4050 feet of 20 inch diameter penstock, including valves, appurtenances; making connections; testing and any other work necessary fora complete and operational project. Construction bids for these two projects will be received on March 15, 1984. PROJECT FACILITIES Several existing facilities are involved_in this hydroelectric project and impact its operation (see location map). The Salinas River Project is the main water supply for the City of San Luis Obispo. It includes the Salinas Dam and Reservoir, pipelines and pump stations. These facilities are owned by the United States Army Corps of Engineers and are leased for operations and maintenance to the County of San Luis Obispo. The City of San Luis Obispo is the only user of water from the Salinas Pro- ject. It is entitled to appropriate water under its State Water Rights Permit #5882. The permit entitles the City to divert water for beneficial use (municipal and incidental power generation) at a rate not to exceed 12.4 cubic feet per second by direct diversion and 45,000 acre feet per year by storage. The City also has a license agreement with the Army Corps of Engineers which provides for receipt of the full safe annual yield of the reservoir. O • 4 The Salinas Reservoir has a capacity of 23,000 A.E. with a drainage area of 113 sq. miles. -Water is conveyed from the reservoir through approximately 9.5 miles of 24 inch diameter pipeline to the Santa Margarita booster pumping station. The pump station lifts the water to the mile long Cuesta tunnel. The water then flows by gravity for over a mile through an 18 inch diameter pipeline to the City's turnout structure. It is at this point that the City's penstock line will begin and convey water to the hydroelectric plant. The hydroelectric plant is located at the site of the City's old abandoned water treatment plant. Water from the hydroelectric plant will then flow approximately 2/3's of a mile to the City's water treatment No. 2 plant. This plant has a capacity of 12 MGD and provides all the treatment capa- bilities for the City. POWER GENERATION The determination of the amount of power that can be generated is based on the head (pressure),available quantity of water, and the type and efficiency of turbine_ generator system used.. The hydroelectric plant is sited so that there is an available static head of 735 feet. The penstock was sized to provide the most cost - efficient design based on pressure lost in the pipeline and initial construction costs. The Salinas Reservoir water is the City's primary source of water. Water is generally delivered.on a continuous basis, except during the drought years 1976 -78, when monthly deliveries were stopped or reduced due to poor water quality. Historically the water deliveries average.530 acre feet per month or about 9.0 cubic feet /second. The.efficiency of the turbine - generator system that is designed for the project will vary, depending on the specific manufacturer selected. For estimating purposes it is assumed that the turbine- generator system.will have an average efficiency of 83 %. Based on these values it.is conservatively estimated that the hydroelectric project will initially generate 3,200,000 KWH of power. As water usage increases, so will the amount of power generated. All the power that will be generated will be sold to the Pacific Gas and Electric Company. The City has a contract with P.G. &E. under its Cogeneration and Small Power Production program. The prices paid for power depend upon the cost P.G. &E. avoids by purchasing energy from cogeneration and small power producers. FINANCIAL The City currently has $900,000 budgeted for the hydroelectricc.project. These funds are in a special interest earning account. The power revenue generated from the hydroelectric project will also be deposited in that account. These funds will be used to pay operations and maintenance costs of the project a revenues will be fund all project by C 0 .d all lease payments_ Analysis has shown that adequate received from power sales and interest to satisfactorily expenses over the terms of the.lease purchase financing. 5. REQUEST FOR PROPOSALS STEN ',CANYON HYDROELECTRIC PROJlc'1' FINANCING 6' VICINITY MAP _ r o, 4 r! SANTA MARGARITA �.,p it \ �9 — SALINAS PIPELINE f — JCUESTA TUNNEL. L, A CHORRO RES. \L SANTA. 1 . BOOSTER PUMP- f MARGARITA i STATION EXIS. WATER s � -- ��- PUMP STATION TREATMENT /� S A L I N A S DAM AGILITY SAL INAS PIPELINE 1 ` ,. �� ► SAN LUIS OBISPO LATERAL. PROPOSED HYDROELECTRIC 10' FACILITY SALINAS RESERVOIR CITY OF .SAN LUIS OBI SPO ABANDONED TREATMENT FACILITY d, LOCATION MAP r� l�y�iYD