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City Council Minutes 04-09-2007 Special (Biosolids) Special Council Meeting Minutes: 4/9/07 MINUTES SPECIAL MEETING - MONTICELLO CITY COUNCIL Monday, April 9, 2007 - 5 p.m. Members Present: Clint Herbst, Wayne Mayer, Tom Perrault, Brian Stumpf and Susie Wojchouski. Members Absent: None Others Present: Bob Brown and Paul Saffert from Bolton & Menk; Chuck Keyes from PSG; Rick Gilbertson from Pro Ag Crop Consultants, Bret Weiss from WSB & Associates and Mark Ruff from Ehlers & Associates. 1. Call to Order. Mayor Herbst called the meeting to order at 5 p.m. The purpose of the workshop was to discuss the biosolids project. Bob Brown from Bolton & Menk provided the history of the project starting from March 2005 when the Council directed staffto study the biosolids process through the bid opening on February 28, 2007. Bob Brown and Paul Saffert discussed the various processes that were looked at and the reasons the heat drying method was selected. The Biosolids Committee also looked at long term expansion needs. John Simola indicated that at the present time there is not sufficient area on the site for Class B biosolid storage. The City needs to get additional storage space. Clint Herbst asked if the next SBR (sequence batch reactor) tank could be built to the east. John Simola stated that if additional land was obtained to the east of the present site they could expand to another row of SBR's (two additional tanks). John Simola reviewed the existing equipment on site. In bidding the project the City looked at two suppliers for drying equipment Komline Sanderson and Kruger. The City of Buffalo added a Kruger drying process that included an incinerator at the end of the drying process. The material is burned and the heat generated from burning is recovered and used to offset the operating cost. Buffalo is building only for their capacity with little or no capability to treat waste for anyone else. Big Lake is also looking at biosolids treatment but is at least six months away from design and bidding. With their system Big Lake may have some excess capacity in the early years of operation. The possibility of having some kind of joint powers agreement or mutual aid agreement was discussed. John Simola felt Big Lake would most likely be the community the City would work with. Six bids were received on the biosolids project. There was $1,000,000 difference in O&M (operating and maintenance) costs between the Komline Sanderson and the Kruger systems with Komline Sanderson being cheaper. The engineer was recommending the low bid for the Komline Sanderson drying process at a price of $8,900,000. Wayne Mayer asked John Simola which drying option he was more comfortable with. John Simola felt the KomIine Sanderson equipment was a better system and it has been used in the United States. The Kruger system I Special Council Meeting Minutes: 4/9/07 has not received EP A approval. Buffalo was looking at the long term cost of energy and for that reason went with incineration. Tom Perrault felt the Komline Sanderson was proven technology and added he was not in favor of incineration ofthe biosolids. Wayne Mayer asked ifboth systems produced a Class A product that could be bagged and sold. Chuck Keyes also felt the Komline Sanderson system was better. The system footprint was smaller but they could process 50% more biosolids in the same time so operating costs would be less. Chuck Keyes noted the City has been working with a representative from the PCA who indicated that the PCA will give a letter on the Komline Sanderson equipment but not on the Kruger. The Council and staff then looked at the revised housing and population projections. Originally it was estimated to add 350 housing units a year. That figure has been revised downward to 250 units. Staff also discussed the permitting process. Staff felt that since the City was not making an expansion to their liquid processing portion of the site the PCA would issue a new permit. Within 5 years when the permit expires the City would have to meet the full standards for phosphorus limits of effluent to the river. The City's limit is presently 3+ and their future limit would be I or less. It was stated that this biosolids project will incorporate the capability of doing something with handling phosphorus in the future when the new standards are in effect. The loading from Sunny Fresh Foods and its impact on the City's wastewater system was also discussed. The City has an agreement with Sunny Fresh that would allow them a maximum of 4,500 pounds per day. There are peaks in the flows but generally they are contributing less than the permitted amount. Chuck Keyes indicated that Sunny Fresh contributes about 50% ofthe nitrogen load to the wastewater treatment plant about only about 10% of the flow. The flow from Sunny Fresh is a significant reason why the City is running out of space at the farm for land application ofbiosolids. Susie Wojchouski asked about Sunny Fresh's commitment to stay in the City. John Simola and Chuck Keyes have been meeting with Sunny Fresh to work out terms of an agreement. Under their agreement Sunny Fresh agrees to pay for expansion needs to get them to 4,500 pounds. Sunny Fresh is paying through a special assessment Yz the cost of the gravity thickener belt and they also agreed to pay Yz the cost of the sludge storage tank. They would also being paying for a portion of the cost of the SBR tank. The City asked if they could buy back to 3,000 permit level. The City is still negotiating the agreement limits. It was felt that any cost beyond the $500,000 already committed to by Sunny Fresh would have to be negotiated. There was discussion on having Sunny Fresh pick up additional costs for the capacity they use. How to determine what those additional costs should be was discussed. Bob Brown said the City would have to look at number of components such as BOD (biological oxygen demand), biosolids and flows to name a few. John Simola felt Sunny Fresh was paying a fair share of the current operating cost but would need to pick up more of the cost for any new treatment. Mark Ruff, the City's financial consultant stated that iftax exempt bonds are issued there shouldn't be the perception that the expansion is being done for one industry. Bob Brown said the Komline Sanderson system could be downsized based on the revised population projections. This would result in a cost savings of$71,500 but would greatly reduce the flexibility of the system. The downsized version of the Komline Sanderson system would 2 Special Council Meeting Minutes: 419107 need to operate 83 hours a week compared to 54 hours for the standard size Komline Sanderson system. In addition, downsizing the system would require some redesign work and resubmittal of plans and specifications to the MPCA. With changes in material prices taking place it would be difficult to estimate how much, if any cost savings would be realized. The three possible actions to take regarding the bids were discussed. The project could be awarded as bid. Bob Brown noted that the bid amounts were good. The City had checked references for the general contractor and reports were satisfactory. For these reasons and others the Bob Brown felt the bid could be awarded without risk to the city but he added that the Council may have other reasons for rejecting the bids. If the bid is awarded on April 23, 2007, construction would begin in May 2007 and be completed by January 2009. The second option would be to reject the bids received and rebid the project. With this option Bob Brown cautioned that both suppliers may not bid again. If one supplier does not bid, the other supplier may come in with a higher bid. If the project is rebid, the contract could be awarded June 25, 2007 with construction to start in August 2007 and completed in May 2009. The third option would to be reject the bids and delay the project for 1-3 years. There would still be short term equipment improvements such as mixers for the sludge. Delaying the project would likely result in an increase in operating costs as well as construction costs. The City has approval of the Komline Sanderson system and biosolids treatment is covered in the City's permit from the MPCA. Bob Brown reviewed cost comparisons with the three options. Option #1, Award the Bid would have a capital cost of$8,900,000. Option #2 Rejecting the bids and rebidding would have cost of$9,325,000. Option #3 Rejecting the bids and delaying the project would have an estimated cost of$II,OOO,OOO. Clint Herbst felt the main concern about proceeding with the project at this time is with the dropoff of in housing units. The question is whether the City would save money by holding off on this project or whether, because of increase in material costs, it would cost theCity more to delay this project. It was also suggested by delaying the project, there may be some improvements in the technology. Bob Brown stated that drying biosolids is a tried and true process. Komline Sanderson has 20+ units operating in the United States. Bob Brown stated the drying process has not changed much but improvements to the efficiency ofthe system have occurred. Rick Gilbertson, from Pro Ag Crop Consultants reported on the application ofbiosolids on the farm. The farm uses a com/soybean rotation. Biosolids are applied to Y, of the land area each year. The yield on the com is 190 bushels/acre with the biosolids providing the fertilizer. The yield for soybeans is about 50 bushels/acre. The biosolids has to be incorporated into the soil, that is surface applied and disked in. The way the biosolids application is permitted you need to go with annual crops rather than a perennial crop such as alfalfa. Rick Gilbertson explained the procedures and answered questions about the feasibility of planting other crops. It was also noted that regulation on the application rates will change from 180 pounds to 140 pounds. With Class B biosolids the full acreage of the farm cannot be utilized since there must be a buffer area from wells. Class A sludge would not have this restriction. 3 Special Council Meeting Minutes: 4/9/07 The Council needs to take some action on the bids at their April 23, 2007 meeting. A second workshop on financial aspects of the biosolids project will be held prior to the regular meeting on April 23rd. John Simola will meet with Sunny Fresh to discuss the existing agreement and possibility of picking up additional costs relating to treatment. The workshop adjourned at 6:45 p.m. \ I~ ~Jv:>5S->~~ Recording Secretary 4