HomeMy WebLinkAboutAgenda Report - June 19, 1996 (74)�dOF0;"l Ci
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AGENDA TITLE: Industrial Development Incentive Package
Cherry Products, Inc., 1122 Industrial Way, Lodi
MEETING DATE: June 19, 1996
PREPARED BY: City Manager
RECOMMENDED ACTION: That the City Council review the agenda item as presented at the
meeting and take appropriate action.
BACKGROUND INFORMATION: Staff is currently negotiating with a proposed industrial user wishing to
relocate at 1122 Industrial Way. The proposed user has made
several requests relative to the City's monthly effluent charges and
existing excess sewer capacity policy. Staff will be making a presentation and recommendation at this
meeting.
FUNDING: Not applicable
Respectfully submitted,
i� H. Dixon Flynn
City Manager
Prepared by Tony C. Goehring
Economic Development Coordinator
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APPROVED:
H. Dixon Flynn -- City Aanager
CITY COUNCIL
DAVID P. WARNER, Mayor
PHILLIP A. PENNINO
Mayor Pro Tempore
RAY G. DAVENPORT
STEPHEN J. MANN
JACK A. SIEGLOCK
CITY OF LODI
Mr. J. Ernie Podesta, President
CHERRY PRODUCTS, INC.
2097 Beyer Lane
Stockton, CA 95215
CITY HALL, 221 WEST PINE STREET
P.O. BOX 3006
LODI, CALIFORNIA 95241-1910
(209)333-6702
FAX (209) 333-6807
May 31, 1996
RE: CHERRY PRODUCTS, INC. INCENTIVE PACKAGE PROPOSAL
Dear Ernie:
H. DIXON FLYNN
City Manager
JENNIFER M. PERRIN
City Clerk
RANDALL A. HAYS
City Attorney
At the last meeting held between representatives of Cherry Products, Inc. and City of Lodi staff, you asked
that the City reconsider its policy on industrial transfer of sewer capacity. More specifically, you inferred
that relocation to the SBG facility in Lodi was contingent upon your (Chem Product's) ability to reduce
front end costs by selling and/or transferring excess sewer capacity to another industrial user at current
market values.
While we certainly appreciate your position on this issue; and the City of Lodi remains committed to
competitively posturing itself in the market place, staff is not ready to recommend that wastewater capacity
be treated as a commodity to be bought and sold by private parties. Endorsing such a policy would, in our
opinion, precipitate a myriad of long term implications — all of which need to be researched and discussed
more thoroughly. Additionally, it is staff's opinion that upon completion of our wastewater rate study that
is currently underway, the value of such capacity for your type of industry may be substantially reduced.
Assuming this phenomenon to occur, it would be extremely difficult to predict values at this time.
However, in an effort to remain competitive with other municipalities, we feel comfortable in tendering a
wastewater rate plan that should be attractive to you. We will recommend to the City Council an incentive
package that will include the following provisions:
1. For the first two years, your wastewater rate will be discounted by 75% of the then -current rates.
Note that this will also give you the benefit of any future rate reduction should it occur. As indicated
in prior discussion, we feel this will be the case for high strength industrial users like Cherry
Products, Inc.
For years three and four, you will be given a 50% discount on the then- current rate. The rate will be
discounted by 25% in the fifth year. Thereafter, the rate will be consistent with the then -current
rate. This rate plan represents an estimated saving over five years totaling $92,364.87 that is
illustrated on the attached sheet.
2. The facility at 1122 Industrial Way will be credited with a total of 570 Sewage Service Units (SSU's)
which can be applied to all of your flow, BOD and TSS components as necessary. This allows for
approximately 60% growth over your estimate of 11 MG/year.
Moreover, we will allow any remaining portion of the 570 SSU's credit to be applied to any
industrial property you purchase in Lodi for expansion of your operation.
M
3. The agreement will also include a caveat that you will be responsible for any required storm water
discharge permits. Moreover, if your firm's discharge is found to be in "significant violation" (per
Federal Regulation, MC 13-12.650 attached), the wastewater rate discount will be eliminated for the
following calendar year.
4. Electric rates, as previously offered in my letter dated May 7, 1996, will be discounted by 10% on
G1 and G2 published rates through December 31, 2001. These schedules are applicable for electric
loads under 400 kilowatts. From preliminary information, these schedules appear to be appropriate
for your business. However, should you require 400 kilowatts or more, a larger discount would be
appropriate, and you would be given the opportunity to revise your electric rate schedule agreement
with the City.
Thank you once again, Ernie, for your interest in Lodi. Please consider this proposal a good faith effort on
the part of the City of Lodi to accommodate the requests of Cherry Products, Inc.. I trust you will recognize
the cost savings provided your firm and I look forward to hearing from you soon. If you have any
questions or comments, please do not hesitate to call me at (209) 333-6700.
Sincerely,
Tony C. Goehring
Economic Development Coordinator
TCG:tcg
Attachment
cc: Mahlon Lott, Cherry Products
Dixon Flynn, City Manager
Jack Ronsko, Public Works Director
Richard Prima, City Engineer
Fran Forkas, Water/wastewater Superintendent
Frank Heeler, Assistant Water/wastewater Superintendent
2093336841 'IIBL!C C.ORWE-I'H--Z 097 P03 MPY 31 '96 09:31
City of Lodi. Public Works Department. water/wastewater Division
Cherry Products, Estimate for 112-2 Industrial Way
Estimated Annual Wastewater Charges: $33,5587.22
CHERRY?RALS 5f IM
MAY -31-1996 09:33 2093336841 P.03
% Discount Discount Rate:
Est. Savings:
Year 1:
75%
$8,398.81
$25,190.42
Year 2:
75%
$8,396.81
525,190.42 -
Year 3:
50%
$16,793.61
$16,793.61
Year 4;
5446
$16,793.61
$15,793.81
Year 5:
256/0
525.190.42
58.398.81 '
Total Estimated Savings;
$92,364.87
CHERRY?RALS 5f IM
MAY -31-1996 09:33 2093336841 P.03
299_-76E-11 -;}RL! _
LCDt MUNICIPAL CODE
13.12
violation of th4 provisions or this chapter or
otherwise causes or threatens to cause a
condition of cortamimcion, pollution or
nuisance, the city may petition the superior
court for the issuance of a preliminary or
permanent injunction. or moth, as may be
appropriate in restraining the continuance oz
such discharge. (Ord. 1613 (part), 1995)
13.121.620 Damage to sewerage
system ---Charge.
"Amman a discharge of wastewaters or any
other substance causes an obstruction, dam-
age or any other impairment to the city's
Sewerage system, the city shall assess a
charge against the mar for the work, matea-
als and services required to clean or repair
the affcetcd portions of the sewerage sys-
tem. (Ord. 1613 (part), 1995)
13.12.630 Civil penalties.
Any person who violates any provision
of utas chapter or permit condition or wbto
discharges wastewater which causes pollu-
tion, or who violates a cease and desist
order, prohibition, effluent limitation, na-
tional standard ofperfommarce, pretreatment
or toxicity standard shall be liable civilly to
a penalty not to exceed six thousand dollars
for each day in which such violation occurs.
The city attorney, upon order of the city
council, shall petition the superior court to
impose, assess and recover such sums. (Ona.
1613 (part), 1995)
13.12.640 Termination of service.
The city may revoke any wastewater
discharge permit. or terminate or restrict or
cause to be terminated or restricted
wastewater service to any premises, which
may include termination or restriction of the
water service if warranted, if a violation of
248-3
:AL2 Pria H11'(' �_l '96 09!32
13.12.5I0
any provisions of this chapter is found to
exist or if a discharge of wastewater caum
or threatens to cause a condition of contam-
ination, pollution or nuisance as defined in
Us chapter. Tile city also reserves the right
to immediately disconnect any user, upon
informal notice only, in the evert of an
unlawful discharge which may cause immi-
nent danger to human health, the environ-
ment, or which threatens to interfere with
the treatment plants operation. This provi-
sion is in addition to other statutes, rules or
regulations, authorizing termination of ser-
vice for delinquency in payment. (Ord.
1613 (part), 1995)
13.12.650 Public notice of violation.
In accordance with Federal Pretreatment
Regulations 40 CER 403, the city shall
publish, at least annually in the largest daily
newspaper circulated in the service area, a
description of those industrial users which
are found to be in significant violation with
any provisions of this chapter or nay permit
or order issued hereunder during trio period
since the previous publication.
B. Significant violations include any of
rite following:
1. Chronic violations of wastewater
discharge limitations (sixty-six percent or
more of all measurements taken in a six-
month period exceed the daily maximum or
the long-term average limit for the same
pollutam parameter):
2. Technical review criteria (TRC)
violations (thirty-three percent or more of
all measurements taken in a six-month
period exceed 1.2 times the limit for toxins
or 1.4 times the limit for BOD, TSS, and
oil and grease);
3. Any other violation of an effluent
limit the city determines has caused, either
treat 7�s?
MAY -31-1996 09:-4 2093336841 P.04
r�9 �3bL'=r1 JBL1C .,OH4C -riSC
13.12.650
alone or ineombinadon with other discharg-
es, pass through or interference,
4. Any discharge that causes endanger-
ment to human herith, welfare or the envi-
nauneni. or causes the city to exercise its
emergency authoriry to halt or prevent such
discharge;
5. Failure to sleet a compliance sched-
ule deadline of enforc mens order within
ninety days after the scheduled date for
starting construction, completiatg construc-
tion, or attaining final compliance;
6. Required reports that ane more than
irirletq days late;
7. Failure to accurately report noncom-
pliance;
S. Any violation determined to adverse-
ly effect the operation or implementation of
theprelmxmencpgp rarn.(Ord.1613(part),
1995)
`" 697 P05 MAY M '96 09:32
MAY -31-1496 09:35 2093336841 P.05
EXHIBIT A
CHERRY PRODUCTS, ESTIMATE FOR 1122 INDUSTRIAL WAY
ESTIMATED ANNUAL WASTEWATER CHARGES: $ 33,587.22
% DISCOUNT
DISCOUNT RATE
EST. SAVINGS
Year 1:
75%
$ 8,396.81
$ 25,190.42
Year 2:
75%
$ 8,396.81
$ 25,190.42
Year 3:
75%
$ 8,396.81
$ 25,190.42
Year 4:
50%
$16,793.61
$ 16,793.61
Year 5:
50%
$16,793.61
$ 16,793.61
Year 6:
25%
$25,190.42
$ 8,396.81
Year 7:
25%
$25,190.42
L8.396.81
TOTAL ESTIMATED SAVINGS:
$125,952.10