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HomeMy WebLinkAboutMinutes - City Council - 1981-09-23 1 373 ti • City Council, Adjourned Regular Meeting Police Dept. & Council Chambers Redding, California September 23 , 1981 8 : 30 A.M. The meeting was called to order by Mayor Pugh with the following Council Members present: Demsher, Fulton, Gard, and Kirkpatrick Also present were City Manager Brickwood, Assistant City Manager Courtney, City Attorney Hays Electric Director Lindley, City Clerk Richter, Deputy City Clerk Stromayer, and Secretary to the City Council Rupp. M-S-R PUBLIC POWER AGENCY - Annual Assessment Electric Director Lindley recommended Council approval of the current operating assessment for the M-S-R Public Power Agency as approved in the regular Agency monthly meeting September 16 , 1981. He recommended that an appropriation be made in the sum of $45 ,000 as the City of Redding ' s share of the $300 , 000 1 assessment. Funds are included in the 1981-82 budget for this assessment. Ill!!��/n s Mayor Pugh noted that these funds are primarily used to survey 4 and research geothermal areas , for negotiation with private land owners , and to determine the feasibility and viability of project properties . MOTION: Made by Councilman Kirkpatrick, seconded by Councilman Demsher approving the City' s continued participation in the M-S-R Public Power Agency and authorizing the appropriation of $45 ,000 as the City' s share of the $300 , 000 assessment. The Vote: Unanimous Ayes PROPOSED M-S-R GEOTHERMAL POWER PROJECT NO. 1 - Participation by City of Redding Electric Director Lindley advised that the M-S-R Public Power Agency approved the first quarterly member assessments for the M-S-R Geothermal Power Project No. 1 at its regular meeting in September. He stated that the development of the project includes the drilling of steam wells , the construction of steam collection facilities , and the construction of power generating facilities necessary to provide for a 55 megawatt power plant. It is estimated that the project cost will be approximately $104 million and the average energy cost is estimated to be between 44 and 52 mills per kilowatt hour, depending on the cost of I(90 1 long-term project financing. Mr. Lindley explained that the estimated amount required to prove the steam supply before long-term financing can be arranged is $20 million. The City' s share would be $3 million; $1. 5 million will be required in fiscal year 1981-82 and the remaining $1.5 million will be required in fiscal 1982-83 . Mr. Lindley recommended that authorization be given for an appropriation of $602 ,025 , representing the City' s share of the $4 ,013 ,500 first quarterly project assessment. Twenty-five percent of the assessment is due and payable by September 30 , 1981 and the balance is due October 13 , 1981. He indicated that funding for this project is proposed to be provided from short-term borrowing until long-term financing arrangements can be made. He added that the success rate for wells drilled in ; the subject area has been very good and therefore , he does not believe that long-term financing will be a problem. 1 1 9/23/81 374 In response to an inquiry from Mrs. Gard, Mayor Pugh advised that the short-term interest rate will be very high but the amount is not known at this time. Assistant City Manager Courtney acknowledged that short-term financing has not been used by the City in the past but is an acceptable tool and is used by other Cities within the State. He advised that the rate of interest would possibly be in the 17 to 18 percent range. , Councilman Kirkpatrick commented that the City is getting involved in some very expensive power projects and suggested that a study session be arranged with all proposed programs reviewed. Mayor Pugh stated he has suggested that staff prepare a chart of all proposed projects , including a flow chart and funding requirements , so that Council can have an over-view. Council discussed the problems with front-end financing for steam projects and the fact that the price of steam is basically geared to the price of oil. Questions were raised regarding what happens to the short-term financing in the event that the project is not completed. Mr. Lindley indicated that R. W. Beck is preparing a proposal to lay out all the City' s power projects with regard to costs and time lines and he intends to bring this to Council on October 5 . E He noted that if Council concurs with the proposal, a study session could be held around the first of November. In response to an inquiry from Dr. Fulton, Mr. Lindley stated that the other member agencies of M-S-R are in agreement with this venture and added that if Redding does not participate, the other agencies will pursue them vigorously. Mr. Lindley noted that it is very beneficial to the City to be affiliated with these power agencies as it allows us to participate in this type of project. He stated that if Redding took the view of striking out on its own, it would be tied to the investor-owned utilities . He said the City ' s Central Valley Project base is not as secure as it was in the past and he urged Council to pursue these projects to provide for our long range power needs. MOTION: Made by Councilman Demsher, Seconded by Councilman Kirkpatrick approving the participation by the City of Redding as a member of the M-S-R Public Power Agency in the proposed M-S-R Geothermal Power Project No. 1 , and authorizing the appropriation of $602 ,025 for the City' s share of the $4 ,013 ,500 first quarterly project assessment, funding to be provided by short-term borrowing until long-term financing arrangements can be made. The Vote: Unanimous Ayes } ADJOURNMENT There being no further business, at the hour of 8 : 54 A.M. , Mayor Pugh declared the meeting adjourned. APPROVED: Mayor ATTEST: City Clerk 9/23/81