Consider Resolution #14-07-132 Authorizing Payment to Connexus Energy to Bury Electric Service Lines for Project Number W1401335

Purpose:
Consider funding the cost (estimated at $91,300) of burying a new Connexus Energy electric service line along Bunker Lake Boulevard, west of Armstrong Boulevard.

Background:
As the Council well knows, the Armstrong/Highway 10 interchange project is anticipated to begin as soon as Fall 2014.  As a result of the Armstrong/ Highway 10 interchange project, Connexus Energy is required to remove an existing electric service line.  The proposed location of a replacement power line is along Bunker Lake Boulevard, between Armstrong Boulevard and Puma Street (often referred to as the "Bunker Lake Boulevard Extension Area").  --Attached are reference maps.

The new electric service line would be located in City right-of-way; and does require a City 'right-of-way' permit.  Based on Connexus Energy Policy, and the City's Franchise Agreement with Connexus Energy, the newly proposed service line would be installed above ground (known as "overhead" power lines) and paid for by Connexus Energy.  The new electric service line would serve two major purposes: (1) provide power capacity for the Bunker Lake Boulevard Extension Area; and (2) provide redundant/back-feed power service to The COR development area.

Why should the new line be buried?
Staff recommends the proposed electric service line be buried (underground) rather than overhead (above ground) for three reasons: (1) aesthetics/view-shed for residents and business owners/prospects; and (2) consistency with recent development in the City of Ramsey; and (3) the cost to bury the proposed power line at a later date will cost 2.5-3.5 times more.

What is the policy of Connexus?
In this particular case, the Bunker Lake Boulevard Extension Area is largely undeveloped and un-platted; therefore, it doesn't warrant underground service based on Connexus Energy's policy.

Based on Connexus Energy's Policy, and the City's Franchise Agreement with Connexus Energy, the 'NET' increase in project costs attributed to burying the proposed power line are not the responsibility of Connexus Energy (meaning any costs greater than the standard overhead power line project costs).  In this scenario, the estimated 'NET' increase in project expenses attributed to burring the proposed power line is an estimated $91,300.

What is the past practice (City's Policy)?
The City does not have a formal policy for this situation.  Considering past practice, over the past decade, the City has reacted to two similar requests/opportunities: (1) along Bunker Lake Boulevard between Armstrong Boulevard and Ramsey Boulevard on the north side of The COR and; (2) along Armstrong Boulevard between Sunwood Drive to Bunker Lake Boulevard.  In both cases, the City paid for the 'NET' increase in project costs to bury power lines via TIF District 14.

What is staff proposing?
Considering the Bunker Lake Boulevard Extension Area project before the Council tonight, Staff is recommending the Council move forward with burying the proposed power line; and utilize dollars from TIF District #1 to fund the project. 

How was TIF District #1 Funded?
TIF District #1 has a balance due to the sale of the "Diamond Graphics Expansion" parcel in 2013 (14280 Azurite Street NW).  This parcel was acquired by the City via TIF District #1 dollars.  Therefore, land sale proceeds were required to be repaid to said TIF account ($407,876).  These dollars are not available for the City's general fund/general operations.  However, they are available for development/infrastructure expenses.

 

Attached to this case:
-reference maps
-FAQs
-franchise agreement
-Connexus policy

Notes:
-Section 4.1 of the City's Franchise agreement with Connexus Energy states: if a project cost is not reasonably necessary for the construction of electric services, it shall not be the responsibility of Connexus Energy.

-Section 4.8 of the Connexus Energy "Electric Rate Book--General Rules and Conditions of Service includes similar language as above and discusses when Connexus constructs buried power lines versus overhead power lines.  In this particular case, the Bunker Lake Boulevard Extension Area is largely undeveloped and un platted; therefore, it doesn't warrant underground service by Connexus Energy standards.

Alternatives:
(1) Adopt the proposed resolution and move forward with the proposed work order.

(2) Do not adopt the proposed resolution and do not move forward with the proposed work order.

Tax Increment Financing District #1 as outlined above.

Staff recommends the proposed electric service line be buried (underground) rather than overhead (above ground) for three reasons: (1) aesthetics/view-shed for residents and business owners/prospects; and (2) consistency with recent development in the City of Ramsey; and (3) the cost to bury the proposed power line at a later date will cost 2.5-3.5 times more.

ADOPT RESOLUTION #14-07-132 AUTHORIZING PAYMENT (Not to exceed $100,000) TO CONNEXUS ENERGY TO BURY ELECTRIC SERVICE LINES FOR PROJECT NUMBER W1401355