HomeMy WebLinkAboutAgenda Report - August 20, 2008 E-13AGENDA ITEM E` 15
(0 CITY OF LODI
COUNCIL COMMUNICATION
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AGENDA TITLE: Adopt Resolution Authorizing the City Managerto Enter into a Letter of
Agreement Between the City of Lodi and Schaefer Systems Internationalfor
the Sale of Designated Municipal Electric Distribution Facilities ($78,132)
(EUD)
MEETING DATE: August 20,2008
PREPARED BY: Electric Utility Director
RECOMMENDED ACTION: Adopt a resolution authorizing the City Managerto enter into a Letter
of Agreement between the City of Lodi and Schaefer Systems
Internationalfor the Sale of Designated Municipal Electric Distribution
Facilities in the amount of $78,132.
BACKGROUND INFORMATION: Schaefer Systems International, Inc. (Schaefer) has two (2) utility
services; both are assigned to the G5 secondary rate tariff.
Representatives from Schaefer met with the City of Lodi (COL) earlier
this year requesting that the two existing secondary services/accounts be collapsed into one 11 primary
service. In order to accomplish this task, the following would occur:
Schaeferwould need to reconstructthe existing G5 secondary services, upgrading these two meters to
primary voltagetservice. To achieve this, Schaefer must purchase existing COL overhead electric
distribution equipment, the two existing padmount transformers and a new primary electric meter.
Schaefer would pay the COL $78,132.00 for said facilities (this cost figure includes labor required by COL
line crews to install said facilities). Schaeferwill then be responsiblefor maintaining this electrical
equipment including the transformers.
The proposed arrangement eonfonm to City Council approved Electric Rules and Regulations:
Rule 2, Section 3a: 'Three-phase demand loads in excess of 500 KVA, but less than 7000 KVA
may, with City approval, be supplied by means of a primary service at the primary distribution
voltage available at the location."
This is a sound financial decision for Schaefer, as the project will pay for itself in a relatively short period
due to the expected savings associated with collapsing the existing G5 accounts into one 11 account.
This industrial customer is interested in entering into the attached LOAwith the COL as soon as possible.
If the Council approves this LOA, Electric Utility staff would then order required primary metering
equipment and related materials. It is anticipatedthat this project would be completed by November 1,
2008.
APPROVED:
8 rig, City Manager
Adopt ReWutkm Authortzing the City ManWto Enter into a Letterof Agreement Between the City of Lodi and
Schaefer Systems International for the Sale of Designated Municipal Electric Distribution Facilities 1$78,132) (EUD)
August 20,2008
Page 2 of 2
FISCAL IMPACT: The sale offacifies and seYvioeswill result in revenue to the Electric Utility
Department in the amount of $78,132.
FUNDING: Not applicable.
GeaV
e F. motor
Electric Utility Director
Prepared By: Rob Lechner, Manager, Customer Service and Programs
GFM/RSUist
Attachments (1)
LETTER OF AGREEMENT: SALE OF MUNICIPAL FACILITIES
BETWEEN
THE CITY OF LODI
SCHAEFER SYSTEMS INTERNATIONAL, INCORPORATED
This Letter of Agreement (LOA) is between the City of Lodi (COL) and Schaefer
Systems International, Incorporated (Schaefer). By way of this signed LOA, Schaefer
agrees to purchase and maintain designated electric utility facilities as identified on the
attached Appendix A.
In summary, Schaefer will purchase designated overhead electric distribution
facilities located at the customer's plant site of 1250 E. Thurman Street, as well as a
padmount transformer. In addition Schaefer agrees to purchase all necessary primary
metering equipment and compensate the COL for all required labor costs to install
said equipment.
In purchasing the aforementioned equipment (padmount transformers and
overhead electric distribution facilities) Schaefer also agrees to properly maintain said
equipment and pay for all repairs necessary for maintaining said equipment in the
event of equipment failure in perpetuity.
The total purchase price of the equipment and associated labor costs listed on
Appendix A is in the amount of $78,132.00. Note: in the event that the labor required
to perform this project occurs after COL operating hours (7:00am to 4:30pm, Monday
through Friday, excluding holidays and weekends), Schaefer will be charged any/all
additional labor costs above and beyond the costs identified on Appendix A.
Schaefer agrees to compensate the COL for the total amount listed in the LOA
prior to completion of said project.
Letter of Agreement: Sale of Municipal Facilities Between COL & Schaefer
IN WITNESS HEREOF, the parties hereto have entered into this Letter of Agreement
dated , 2008.
CITY OF LODI
Blair King
City Manager
ATTEST:
Randi Johl
City Clerk
APPROVED AS TO FORM:
D. Stephen Schwabauer
City Attorney
2
SCHAEFER SYSTEMS
President
Date
Letter of Agreement: Sale of Municipal Facilities Between COL & Schaefer
Purchase existing plant
Purchase 2 transformers
Labor/Installation
Upgrade existing
system
TOTAL
NOTES:
APPENDIX `A'
Installation Depreciation
Cost Allowance Buy Out Cost/Total
$28,657.00
$10,517.00
$18,140.00
$30,050.00
$11,028.00
$19,022.00
$13,774.00
$0.00
$13,774.00
$27,196.00
$0.00
$27,196.00
$99,677.00
$21,545.00
1 $78,132.00
1) Existing plant & padmount transformers were installed in 1997.
2) Existing plant & padmount transformers based on 30 year service life.
3) Primary metering installation & upgrade costs based on straight time labor. One day plant
shut down (minimum) required for each of three pole upgrades and installation of primary
metering equipment.
RESOLUTION NO. 2008-164
A RESOLUTION OF THE LODI CITY COUNCILAUTHORIZING
THE CITY MANAGER TO ENTER INTOA LETTER OF AGREEMENT
BETWEEN THE CITY OF LODI AND SCHAEFER SYSTEMS
INTERNATIONAL FOR THE SALE OF DESIGNATED MUNICIPAL
ELECTRIC DISTRIBUTION FACILITIES
NOW, THEREFORE, BE IT RESOLVED that the Lodi City Council hereby
authorizes the City Manager to enter into a Letter of Agreement between the City of Lodi
and Schaefer Systems International for the sale of designated municipal electric
distribution facilities in the amount of $78,132. This figure includes the purchase of two
transformers, primary metering equipment and labor costs associated with the
installation of said equipment, and upgrading the existing system to accommodate the
customer's need.
Dated: August 20, 2008
hereby certify that Resolution No. 2008-164 was passed and adopted by the
City Council of the City of Lodi in a regular meeting held August 20, 2008, by the
following Vote:
AYES: COUNCIL MEMBERS — Hansen, Hitchcock, Johnson, Katzakian,
and Mayor Mounce
NOES: COUNCIL MEMBERS — None
ABSENT: COUNCIL MEMBERS— None
ABSTAIN: COUNCIL MEMBERS— None
�OH
City Clerk
2008-164