Town Board Workshop

Whenever you tell us, we're ready.

Wow. Okay. And uh I'll wait till 6:30.

All right. Well, uh, welcome everybody to the Thursday, November 20th, uh, Town of Webster, uh, townboard workshop. Uh, tonight we have three presentations and the first one is a presentation by Josh Artuso, the town's director of community development. He's actually going to be presenting on two uh, different uh, items. um the Energy Choice Act um and also on a clarification correction relating to the West Webster TAP grant application uh from a presentation resolution we did two weeks ago. So Josh, I'll hand the baton to you. Thank you. Well, as you mentioned at the last town board workshop, um I presented three quotes for professional surveying and design services relating to our upcoming TAP grant application for uh design and construction of sidewalks in West Webster. Um each firm provided two

separate quotes uh that included pricing for basic surveying as well as preliminary design. Now unfortunately um two out of the three firms provided a combined total for both services on their preliminary design proposals and as such I eronous erroneously reported to the board that the total cost for the recommended firm uh as being 36,000 for both basic surveying and preliminary design services. So upon contacting them uh the day after that board meeting to give them authorization to proceed uh I was informed that the the intent of their proposal um was that it was the 36,000 for preliminary design plus the 15,000 for basic surveying services. Um so I basically um misinterpreted the the their quote unfortunately. Um, so the recommended firm's total cost, as I mentioned, was intended to be 51,000, which still comes in as the lowest bid

out of the three by approximately $20,000. So, in the spirit of transparency, I wanted to bring this uh to the board's attention and ask that the original resolution from two weeks ago be rescended and request that a new one is approved for the correct amount of 51,000. Um, now since two weeks ago, uh, we have learned of some additional information relating to the TAP grant timeline. uh and the application portal which at the time had not been opened up yet. Uh just earlier this week we received notification that the portal is opening up. Um there's been a total of $97.4 million allocated for this round of the TAP grant and the awards are going to be a minimum of $500,000 to a maximum of 7 million. Um, so the timeline that they've outlined uh involves an application pre-review on January 15th. Uh, we would then receive some preliminary comments back in early February and then the

final application submission deadline uh is March 12th, 2026. So now that we have this information, I did reach out to Kostage Engineering earlier today to confirm uh that they are still able to meet uh the the proposed deadline for the grant. And they assured me that uh if we get started right away and we keep on the uh projected schedule that they would be able to have both the surveying and preliminary design completed and available for inclusion in our final application uh in early March. So with that, I will turn it over to the board for any uh questions or comments. It makes sense. I mean, it it's unfortunate. It's very unfortunate, but at least it makes sense the disparity between the quotes. It's much less disparit now.

Yes. And in hindsight, I regret not confirming or clarifying that with hostage. Um the the proposal we did receive was a little misleading. Um, it did have some things that led one to believe that it was all inclusive, but I can also see how um it wasn't. Josh, I just want to thank you for presenting it. Um, we all have missteps and uh certainly I'm very appreciative of you bringing this forward to us in in this manner.

Thank you. No, I I met with Josh earlier in the week and I completely understand how you could have missed that. So, I appreciate your honesty and your forthrightness bringing it to us. And I have no problem, as I told you that day in your office, I I have no problem with um rescending and then voting again on the different on the increased amount at all.

Thank you,

Jenny. Anything?

Well, thank you for your time and effort and everything. I'm just hoping that, you know, with everything right now in the government that we will get the grant because we're not so sure, right?

Never are.

Okay.

That's the whole point of the grant process.

Well, I know. But you got to have some skin in the game to get the grants and by doing this work. And it's the third try. So there's the the furniture strippers is down. There's action across the street. There's movement in the area. There's a desire to um bring this revitalization project to life. And while nothing is a guarantee, it certainly seems like we should have a favorable application and we'll know in a few months if in fact that's true. There there actually is one guarantee and that is we'll never get those that we don't apply for.

Touche.

And could you tell us how much would it would cost for us to

the project itself and everything?

Yeah, just you know just for the record.

Sure. Um well part of what the consultant will be tasked with after creating the preliminary design is coming up with preliminary cost estimates. When we applied uh two years ago, we put some conceptual cost estimates together um that weren't really based in a high degree of accurate surveying, if you will.

And at that time, I believe the project cost was uh around 5 million, 80% of which would be covered under the grant.

Okay. Thank you.

Mhm. All right. Would you want to roll right into your second presentation?

Sure.

Okay. Uh this next presentation is about the energy choice act uh which you may or may not have heard but I will elaborate a little bit further in the presentation. So a little background in history. Back in 2019 uh the New York State Legislature passed the Climate Leadership and Community Protection Act, also known as the CLCP. And what that does is it sets fairly ambitious goals towards economywide carbon neutrality for the whole state of New York. Um reduction in greenhouse gas emissions uh statewide and the goal is a 40% reduction by 2030 and 85% reduction by 2050. And also as a part of that act, it created a climate action council which was tasked with developing a scoping plan uh to come up with recommendations to meet the state's goals.

So in 2022 that climate action council finalized their scoping plan which recognized the need for a quote unquote multi-pronged policy action including new regulations to meet these ambitious goals. So, as a part of the 2023 state budget, uh the legislature passed what was called the all electric building act, which requires all new residential buildings and even some smaller commercial buildings to be powered by electric only. And it is to take effect January 1st uh 2026. And what it does is it essentially bans any uh new connections to natural gas. So earlier this year there was a coalition of opponents um various builders, developers, trade organizations um that filed a federal lawsuit in it in an attempt to overturn the law. Um, in August of this year, there was a court ruling that actually was in favor of New York State. And now that decision is being appealed uh in appeals court

and just last week um the state announced uh made an announcement to uh that they would be suspending the implementation of the all electric mandate until the appeals case is resolved. So, what is the Energy Choice Act? Well, um, Congressman Nick Langworthy, uh, from the 23rd Congressional District here in New York, introduced a bipartisan bill that prohibits states or local governments from banning an energy services connection, reconnection, modification, installation, or expansion based on the type of source of energy to be delivered. So communities across the state have begun passing local resolutions in support of this national bill. Now while well-intentioned um there are some reasons to support the energy choice act. Um currently the electrical grid uh the condition of it cannot support the additional demand for electricity at this point in time. The all electric mandate will increase

the cost of housing at a time when housing affordability is a major issue for many residents. Um, these all electric heating systems are on average 7 to $10,000 more expensive than traditional uh gas powered furnaces, making the cost of new construction uh significantly higher. It limits personal choice and especially um in our part of the world uh natural gas and other forms of energy provide an alternative option for heating and cooking when the electric is out for extended periods of time whether we have a large snowstorm or a rolling blackout. So the request tonight uh with that information is seeking uh the board to support a resolution in support of the Energy Choice Act. Um currently the the temporary pause that New York State has indicated um would remain in effect for 120 days after the uh appeals court decision is rendered. So, it's

currently a reprieve, a temporary reprieve for for local builders, but it at any point in time uh if there is a court ruling that upholds that law, um we will be going back to that uh natural gas ban within 120 days. Um, that's why we're we're asking the town board to support the national bill that would prohibit it across the nation and would allow consumer choice for their energy providers. Um, so with that, I will certainly be happy to answer any questions you might have or hear any comments.

I'll just comment, Josh, and first of all, I want to thank you for bringing this forward. Um I am in full support of this and um there's there's not a builder out there or developer um that is in favor of you know going all electric and eventually it's going to come to individual households are going to have to go all electric. It's

correct. Anybody that knows the problems we're having with the grid, they're putting the cart in front of the horse and it's it's pretty concerning to put it politely that they push this legislation through. So, anything we can do to um to support, I am 100% behind it.

Great. Thank you,

Jenny. Well, I know that um the governor, she have resented the bills too because of you know the situation. She know that there's a lot of push back and as being a realtor myself you know I would not you know support um to go out the electric either because I don't know why New York always try to copy California and we should look in you know to it to see all the um the the pro the con that is affecting them right now. we just use an auto electric,

right?

Cannot accommodate it and especially in New York, you know, we have snow and everything like that. It's going to

takes a lot out of it. So, I thank you for, you know, for this and um I'm in favor supporting it.

Thank you,

Jennifer Patty.

I I have no additional comments. I I am also in choice of also in favor of supporting the Energy Choice Act.

Yep. I agree. I couldn't imagine not having a gas stove. I've never not had a gas stove. I couldn't imagine not having a gas fireplace. It It's just um

these these

the whole thing is just un unbelievable. And we all know that the cost the increased cost to the builders is just going to go to the tenants of these buildings.

Of course, it is

absolutely

without a doubt.

Plus the fact that it's held up the construction of many of these these housing, many of the affordable housing developments

can't can't get started because they the energy companies are telling them we don't have enough power on the grid for you.

Well, there's a development in Canada right now.

Right.

They can't bring it online because they don't have the the infrastructure for it.

Yes. So, I think this is a good thing.

Absolutely.

Great.

Thank you.

No, thank you, Josh. Thanks, Josh. And and we're ahead. Uh so, wow. with this four minutes that were ahead. The next presentation tonight is by Paul Adams, who is the town's uh director of finance, and he is going to present on the financial benefits of the renewable natural gas RNG project. Um, for anybody that's here tonight, we did have a handout uh that kind of gives the proposed timeline uh past, present, and future on this project. So hopefully everybody has that. And I don't I don't know if it got uploaded where people at home can see it on the screen at some point, but if not, we'll make sure we get it up there. Uh so Paul.

All right. Thanks, Tom. All right. Tonight we're going to talk about the effect of the renewable natural gas investment tax credit on our current wastewater treatment plant project which is uh currently in process. Um two weeks ago we had Lynn from WHam come in and speak to us. she had completed an engagement for the town uh and put together a safe harbor uh memo and uh essentially she she was tasked with identifying uh components of the current project which would qualify for this tax credit. uh she identified um approximately $17 million, but we also would be able to add on the estimated $9 million cost of the RNG piece of it. So, she thinks the eligible basis will be between 26.7 million and 33.4 million. The credit uh is 30%, we do qualify for the enhanced credit. Uh so you come down to a gross credit of 8 to 10 million. Uh but we will be financing this project

with municipal bonds and the IRS requires a 15% haircut on the credit uh due to municipal financing. So we're looking at credits between 6.8 million and 8.5 million for the project. And uh Lynn did say that uh based on the current laws, she's pretty she's certain that uh the credits are going to be in place for at least 10 years. She thinks we're good as far as the tax law goes. Okay, we'll take a look at the uh the current original wastewater treatment plant project versus an RNG project. Uh the expected project cost for the current project without RNG is 87 million. We did receive a $20 million WEDA grant from New York State. So we're looking at a net borrowing currently of about 67 million. uh at the maximum ITC credit uh we would be able to reduce that by 8.5 million but of course it would cost us another 9 million to put in the RNG components so we're looking at a slightly higher uh net project cost of about 67.5

million uh at the minimum credit being really conservative uh we're looking at u a project cost of about 69.2 million. So here's the projected impact on the town financial statements. So So I'll read it to you. Below is a comparison of the expected annual cost for the current project versus the RNG project at the minimum the maximum ITC credit amounts. At the minimum maximum ITC credit amounts. So the RNG project will result in an annual savings of between 353,000 to 428,000 per year. So I took a look at the annual debt service amounts. That's principal and interest. Uh it's original project is going to be about 4,20,000. At the max credit, we're at like 4,48. At the minimum credit, we're at like 4,151,000. But one of the advantages of RNG is that we're going to be able to produce uh pipeline quality natural gas which can be sold and the net revenue from going

to be about $456,000 per year. So when you couple that with the principal and interest payments, we're actually further ahead at the max credit of about 428,000 a year and $353,000 at the minimum ITC credit. So from a cash flow standpoint, we're ahead. So that those annual savings actually have a debt service value. So essentially based on current borrowing rates, uh each $1 million of funds borrowed equates to about $60,000 per year in costs and debt service costs. Uh therefore the tax savings of 353 to 428,000 is equivalent to a reduction in borrowing of about 5.9 million to 7.1 million. Uh this money can go a long way to funding other projects such as the Vosber Road pump station or fulfilling other needs uh within the sewer system. Um so I mean it the savings are substantial and and you

may ask um why is it critical to move forward with this now? uh because one of the one of the catches to this whole thing is the RNG portion has to be part of the continuous project. So it has to be started before the construction on the current project ends which is currently scheduled for July but from what I heard they may be running out of schedule so that might be as close as May. So so we are up against a bit of a time crunch. So that's just something to keep in mind. So if you have any questions or comments, um we can talk about it. Are the uh estimated constru construction costs are they accurate? Do we have all the numbers? Because when we met the other day, we my understanding is we don't have all the numbers yet. Yeah, we have a we have a $9 million estimate at this point, but that's a very preliminary estimate.

Don't we need to do the engineering to get that?

Well, I need some numbers to make a decision here.

Yeah.

I don't want to see nine go to 12 or 18.

So, yeah, I do need the numbers. And to your point, we don't have to make this decision tonight. we can push this till January 1 when we have a three new board members coming in. Let them take a look at spending $10 million, $9 million and it gives time for Navatas to come up with some more reasonable numbers

or I shouldn't say reasonable, it's more accurate numbers. I I guess my question then would be to Bob and I I know Bob's got a presentation as well, but um will a month give you an opportunity to come up with perhaps truer numbers or do we need to do the engineering first?

Uh in order to improve the confidence of the numbers we would need to go through the engineering effort,

right? And the full engineering effort is

$348,000. I got if you want me to jump into the next one. I don't want to jump on on Paul's presentation. That's all.

What's the turnaround time on that?

Four months.

Okay. You're getting your questions ahead of time, Bob. This I know this is the first we're getting the Q&A before your presentation. It's cool. All works. Um,

so we should probably let Paul wrap up his if there's any other questions for Paul.

So I have a question to Paul.

So who are we selling this gas to and at what rate?

Pardon?

The gas.

Can I give my presentation then I'll address those questions. Maybe maybe we roll right into

just roll right into that question

and then Paul can stay up there and we can divvy the questions up between the two of us.

Can I just be this isn't a question as you roll in. Bob,

uh these are more comments.

Okay.

For Paul's I I Paul you said five times during that pres presentation that Lynn said Lynn said Lynn said that's great. You dealt with Lynn

at with him. I want to make sure everybody understands with them is uh the old predaxic they are one of the largest and most prestigious accounting firms on tax credits and this they are a subject matter expert and I was involved with this and there was no less than six or seven people on the team engineers tax accountants Lynn was the lead but I don't want people to think that Lynn who was great she was here two weeks ago this was and that's why when we did the resolution a few weeks weeks ago, we did no less no more than $40,000 with and through a lot of resources at this.

The town board had the foresight to make sure that we are eligible for all the things that Paul just said in his presentation and two weeks ago with him came and showed that we are eligible for that. And there's one other thing I think that is very important to understand. I think I brought it up two weeks ago. One of the things I really liked about working with the six or seven engineers, and I can't remember the one gentleman's name that kept pushing us, Paul, and pushing Rick, why are we only going with this part of the process for the for for for this uh grant credit? You're being too conservative. You could get back into the headworks and you could get back into some of the other things. And the IRS and the Treasury, it's certainly uh uh sustainable that that could qualify with this credit, too. And we are a conservative town. We're a conservative budgeter. That's how we budgeted. And we decided, and Paul, I appro applaud you on this. And Rick, I think you were in on this decision, too. We don't want to come to the board into the community and show that $50 million of this project can qualify with the Treasury and IRS in two years, and that the the credit or the tax refund is going to be $11 million. That's possible, but we would rather

show the community and show the board that's voting on this the conservative number of 8 million. If there's a surprise in two years, it'll be a pleasant surprise. Mhm.

So I think that's critical in the understanding and that that that uh handout that everybody has also somewhat shows uh the time sensitivity to this as far as and Paul from talking to Bob Whmer and Rick earlier. I'm not sure where Scuttlebutt got that they're ahead of schedule, but July 1, Bob is still where you're at on finishing the current contract.

Yes, we are maintaining our current schedule.

You're up.

Okay. Can I just say that uh just to agree with Tom the WHM process was very robust. They had many engineers involved. It was a whole team and uh they're top-notch. Uh it was very impressive. They gave us a 14page safe harbor memo which explained in detail the steps they went through and they did say that the basis they come up with was on the conservative side because they're doing a safe harbor look at this.

Yeah. So these tax credits, just so we're all on the same page, they're 100% guaranteed. Correct.

The tax credits

as of right now, that is the tax law. But I would say that you can never say it's 100% guaranteed. too many variables.

I think if you read the safe harbor memo and Lynn did and I'm sure that Councilman Gale has read the memo because he's always prepared and I got to give him credit for that

is that based on the rules of engagement today and the way precedent has been the big beautiful bill and all this stuff because there isn't an election until 28 and the timing of this and whatever there would be something seismic that would have to happen for this not to be in place.

Lynn Lynn feels that we're good for that. You keep saying Lynn and I appreciate that cuz you got a good relationship with Lynn.

I talked to six or seven other people in these meetings

that were big wigs at uh uh with him. And not only that, and this is why I still say we have the best finance director in Monroe County. Paul who is a measure twice cut once type of guy and I dig that. He also has gone to Bonado which is another big accounting firm that does this work and we are getting a second uh look at this not so much from the safe harbor memo but because if we move on on the RNG there is probably close to$2 to $400,000 of soft costs that go into the accounting work and the tax work besides the construction. All right. Some of that soft cost is $348,000 of engineering, which on a $9 million estimate is uh I don't know what does that end up being? Uh

4%.

4%. Which, you know, okay. Uh I think John, who is more probably of all the board members the most astute of this stuff, knows that that number and Bill Abbott used to say 10% is what you usually look at. Your presentation will show why it's more like 4% because you're not what you'll get into your presentation. But the Bonado deal people when we were on a zoom meeting with them last week they said that the with them safe harbor was I'll use the word pristine. We're talking to Bonado because if we move forward with this we're not married to with him to do the remaining work. We contracted with Wiffam for the $40,000 safe harbor. Now there is like I said probably somewhere between $200 and $400,000 more of soft costs associated with this from accounting firms either like a or bonad deal. So I think Paul is taking the right approach that we saw Concord which Bob you suggested to us and we talked to Concord. They're very respected firm that do this. Once we talked to that them and we talked to with them, we decided as a board, let's go with W with them. No reason for Concord to do it and then have W with them paid to check

their work. That seems like a waste of taxpayer money, especially when with them has a pristine reputation. But now that we're past that, I think you're doing great proactive planning, Paul, to get in with Bonado. And I appreciate that you let me sit in on those meetings and Rick sat in on those meetings, too. And that Bonado is basically seconding that. Yeah, you guys are you guys are set. Now, I appreciate Councilman Cahill's skepticism, but I think in the last six years, we've really brought to this town that we bring in subject matter experts to confirm or disaffirm or deny what may be people who aren't subject matter experts. John's not a subject matter expert on tax law, nor is Jenny, nor am I, nor is Patty, nor is Jennifer. But we are tasked with the stewardship of the town taxpayers money. I thought it was a wonderful show of how good this town board is to go with the $40,000 to basically find out before we move forward with $350,000 of engineering and 9 million of a RNG product. I thought it was a phenomenal $40,000 spent. And you know what? I would feel that way if she came back, Lynn and her team and said,

"You don't qualify." But she didn't.

So Bob, I ate up the extra time. Now you have the batan.

I know we were ahead for just a second there.

I don't know if you're still ahead cuz 703 and yours starts at 7

710. So we are

Yeah, you're ahead.

Uh, real quick, um, we're just talking about digesttor gas and the conversion of that into a value added product. So it comes from the anorobic digesttors that are already constructed at the facility and currently operating. Um so they take down take material break it down and turn it into uh basically methane natural uh natural gas uh and carbon dioxide. Um right now as the facility is currently designed and in operation um about 47% of that uh will go into a uh boiler. uh that boiler provides heat uh to the digtor building and to the digesttors themselves to maintain the biological process uh out there. Um this was one of the savings of the project. Uh this boiler formerly used to the previous boiler uh operated on natural gas. Uh so now it will operate on digtor gas thereby saving the purchase of that natural gas.

any excess gas is currently uh sent to a flare so it is combusted uh in a safe uh manner in which to hit the permit compliance. Um however there's no financial benefit of uh of that digtor gas. So with that um we spoke previously about taking that digtor gas and converting it into what is called RNG or renewable natural gas. Uh so that is gas of the same uh quality uh that comes out of the natural gas pipeline. um that was just talked about uh for uh uh uh utilizing it at people's houses or at at businesses. Um so again, this is a this is a four-month uh design process in order to come up with uh the necessary uh price documents uh permit applications uh and uh as you mentioned uh Mr. Cahill uh the RNG sale proposals uh for the purchase of that renewable natural gas. Uh the total fee uh that we're proposing for that is $348,000. Um there's five main components uh to this engineering and design effort. Uh one is the selection of the technology. Uh the design documents uh permitting, the RNG sale, and then the uh and pricing. So I'll go through each of

those uh specific tasks. In terms of the evaluation of technology, uh there are two uh main types of systems that can be implemented uh here. There's a membrane and a what's called the pressure swing absorption technology. And what we want to do here is make sure that the plant staff has an opportunity uh to review both of those technologies uh since they would be operating the facility going forward and to evaluate the differences between those two systems in terms of the uh capital expenditure uh for the system and the operational expenditure. Look at the maintenance requirements uh so there's a good idea of how much maintenance time and effort goes into it. talk to other operators uh and meet with the vendors of these systems similar to what we did for all of the other equipment at the facility. That way the plant staff uh knows what they're getting uh and is comfortable uh with the equipment that is going to be installed. Uh the second uh piece of this is the bulk of the work and this is the conducting the the design. Uh so there is a significant amount of process piping and equipment that must be designed. uh the site must must be uh laid out uh with all the components of that structural elements of uh of the system uh the electrical connection to

it and then uh finally uh the connection to the uh RG& gas main which is how this uh RNG uh enters the distribution grid uh and is then uh purchased uh from Webster. Uh in terms of permitting application, the nice part about uh this project is because uh the facility has just gone through a major uh permitting process. Um this would be just a modification uh to the existing permits uh that have just been received and notification to uh DEEC uh that an additional construction task uh will occur. Um the most significant effort will be working with RG& on what's called an interconnection agreement. So anytime uh a supplier uh connects to a distribution system either the electrical system or the natural gas distribution system uh there's an interconnect agreement and that's basically terms and conditions uh to allow a facility to inject natural gas into RG&'s uh system. So it includes monitoring uh the actual connection point uh how the system will operate a number of uh items that must be uh coordinated and taken care of.

Um and then the uh the big one uh the value of the gas. Um so this is a two-part uh piece. One is modeling the gas characteristics. Uh so there's different uh ways to value the gas based on how it's created. Uh so there'll be some uh modeling that is done and then uh soliciting the proposals for the purchase and the offtake agreement for that. Uh for uh purposes of doing uh the offtake agreement and the soliciting of the proposals uh we have partnered with a uh local firm uh here in Mon Monroe County called Rev uh LNG. Um so they are uh very experienced with more than 50 installations at least 10 to 15 of which are in New York uh where they take uh gas from different digesttors uh upgrade it to RNG and then sell it into the into the pipeline uh in a variety of different offtake agreements. Uh so they will be uh leading the effort uh to solicit the proposals for the sale of the gas And then finally uh the development of the price uh so what is the detailed

scope schedule uh equipment price uh that is necessary for the purchase and installation of the equipment startup commissioning and so forth and so on. Uh as part of that um a question that's been asked of me in the past is uh will this uh component uh have a guarantee uh that rolls in like the guarantee for the rest of the project? And the answer is yes. Uh there will be a guarantee on the amount of revenue uh that is generated as part of the project. Um what that guarantee looks like that's part of the evaluation, the design and uh the solicitation of proposals for the offtake. But once we get all that information together, we can then formulate an amendment uh to the existing guarantee such that this project, this component of the project will be consistent with the rest of the project uh which is uh uh able to offset uh the majority of the cost of uh the overall project in terms of new revenue uh operational savings and the like. So uh that's pretty much it. About four months to take care of it. Um, and uh, I am happy to answer any questions at this time.

You just answered the question that I had written down about the guarantee. So, thank you.

You're welcome.

So, I just like to know I got a couple questions. Um,

RG cannot refuse the connection. Yes or no?

RG cannot refuse the connection. they can um they get to dictate the terms of the connection in terms of the operating pressure, the quality of the gas um and uh a requirement for certain monitoring uh components to monitor the gas. Uh they have provided already the quality of the gas. Um so they have a published gas specification. uh and that is what we have done all of our preliminary work on uh showing that we can uh produce a gas of that quality.

I I do have another question. It's one I asked early on in the discussion of this and since um Josh's presentation this evening about the possibility of New York still could decide to go all electric, um I said, "Well, what value will the gas have if New York State is is going to eliminate gas connections?" But I believe I was told that these these credits or this this gas is sold across state lines.

So this gas is is sold in what's called a virtual market. Um so a buyer of the gas is buying the gas because they want to uh have some sort of environmental attribute or they want to purchase gas that is coming uh from uh a biological process. So they are buying the gas and though they are themselves are not consuming the molecule of gas that you produce at the facility um because it is being produced it offsets other gas that would have been injected into the system. Uh so it's what's called a virtual sale. So someone in anywhere that the gas can eventually get if you trace the pipeline. So anywhere from here to California, anyone in the country can buy the gas from you. And that is why you're getting a value for that gas that is well above uh the typical commercial value of the gas. So the gas is getting a value anywhere from two to three times uh what is what you're buying for typical gas um coming off of the pipeline.

Thank you.

But we're not so I'm sorry. But we're not but you're not so sure that the buyers are from all over the state.

The buyer can be anywhere in the United States.

I know. But like I said, but we not like

know for sure like guar, you know, it's not the guarantee. Let's say California or or or Montana or or taxes. We don't know, right? So that's a if.

So

we don't know there's going to be the buyers for these if we invest in this kind of money, you know, um and more money we're going to be spending for our taxpayer. So at the completion of the design when uh Navdus would be offering up the price to construct and the offtake purchase agreement that agreement uh typically has anywhere from a 10 to 20year term and that is negotiable depending on Webster's preference. You can sell it for two years, three years, 5 years, 10 years, 20 years, whatever you wish. It all depends then on the the terms of that agreement in terms of the value of the gas. So, prior to uh the commitment to spend the money to uh put in the uh equipment, you would have the terms of the contract and a buyer with which to to sign that contract to. You would have a time when you would have to put the system into service so that you could buy the gas. So if we had a a construction schedule that said it would take 9 months, you know, you would guarantee that within 15 months you would be able to supply that gas and then they would agree to buy that gas at a fixed rate uh for x number of years.

So I know that you haven't done the engineering drawings and and we've been given a price tag of 9 million.

Yes. To me, I don't know where you got that number. I really don't. And I'm not trying to cast dispersions, but I'm I'm extremely concerned with the price tag. This project started at like 30 million. We're already up to 67. We're bonded to 85. Um, and and I'm not saying this isn't a bad thing. What I'm saying is I'm concerned that the numbers are not accurate for us to make a decision on at this time. And I know it's going to take you some months, but I would be very alarmed if I saw this projection of 9 million all of a sudden go up to 12 or 15 million. I I would I'm I'm very very concerned about that right now. I really am. And I also think I I really honestly feel that we should not be making this decision with this board because there's going to be three new members on this board and effective in January and an expenditure of this significance in my opinion should be

waiting for the new people to come on this board get them up to speed and get their input. That's where I'm coming from. But I appreciate everything you're doing and I appreciate you're keeping to the schedule to finish in July. This this project would push it out what another

how many more months?

Uh so right now we're projecting from agreement to implementation about 12 months. So with the current schedule today we would complete our uh engineering and pricing in March or April. Uh so then it would go to let's call it March of 27. So that's an additional 9 months.

What impact, if any, will this have on Fair Life in their project?

This is independent of Fair Life.

Great. I knew that, but I just wanted to get that out there.

Absolutely. And and I'm very happy that uh uh Councilman Kale, for the people in attendance tonight, and for anybody watching this live or taped, uh did a truncated trip down memory lane when he said, and I'm somewhat paraphrasing, he's concerned this project started at 30 million, then 67 million, 85 million. He's not wrong. What was not elaborated on was that over the last four years, we have shown unequivocally, irrefutably that the $30 million project that was going to be an asset renewal, replacing old stuff with new stuff with no cost savings, no revenue potential. And we came in and showed Paul Adams did Rick Canali is our chief plan operator. Navatas we showed certainly the way it got to 85 million is not is because of uh fair. Let's just call it what it is.

I agree.

But we have shown this board has sh been shown and the community has been shown probably a dozen times that I know it's not intuitive and I'm an accountant. I'm a math guy,

but the $85 million project is costing the taxpayers less than what the $30 million asset renewal project would have cost because the $30 million was just replacing old stuff with new stuff that would rot in another 30 years like sewers do. We didn't have Fair Life. when you put in fair life their revenue upsizing the plant getting the cost savings sludge from almost 500 to a million all of that I think it's important as long as we have some time here that council male is not wrong it did go from 30 million to 85 but I want to make sure anybody who's been paying attention to the first 10 15 chapters of this book as we're in the next chapter of this book I think it's important that they understand that this board has been great stewards, including past board members of Bill Abbott and Barry Dean on this who saw

and who took the risk of stepping out of outside of the way traditional projects are done, Wix law, low bid to open their mind to energy performance contracts that some of the board members when we first presented it back in 2022 said, "No, no, no, no. Don't want to see that. That's not how it's done." And we applaud those board members. You really need to take a look at this that this is a representative republic. 45,000 people voted you in to take a look and not just close your mind to options. And when they did take a look at the pros of energy performance contract, all of these votes have passed 5 nothing over the last four years. And that's not because I'm a magician as far as how to get people to vote because it made sense as we move forward tonight to doing a resolution with this configuration of board. And I respect and understand what Councilman Cahill is saying about the next board. And I have been very vocal about being mindful of the next board. I've written articles about it. I've think my actions have matched my words about being mindful to the next board.

This is not melodramatic. We have one chance to make good on this one. If we do move it to the next board, which on the surface you're like, well, that makes sense. Let let three out of the five new board members who, by the way, in January will have a fire hose of things coming at them. I don't know when they would have the time to be ready to vote on this intelligently, but with four months to engineer and I know that Navatas is doing us a solid to fasttrack that engineer. I want to make sure everybody understands that if we do kick this to January, in my mind, that is tanamount to we have ended this. We spent the 40 grand, we got the answer. I get it. We kicked it to the because there's only four four meetings in January and February. And if you want me to do the calendar of those, okay? If you don't approve this and vote on it by February 20th with four months to go, you're coming right up against July 1st. So, they'd have to finish that engineering in four months and you'd come to a board meeting, best case scenario, sometime in late June. And in that late June, I mean, we'd have to go

along with, hey, we're not holding up the $85 million contract. We'd be, I would hope you guys would be. I hope is the governance. You would be pushing them to finish. And if they finish and then the board gets up to snuff the three new board members and they say, "This is a good idea. Now that we understand, we want to do it." The time has passed. So much of the credit is based on the I think twothirds of the basis of the credit is based on work already being done.

The board needs to understand that. The community needs to understand that.

I don't

if you table it and you kick it down the road, it's tamount to ending this project in my opinion. I I don't agree and I agree with Councilman Cahill that it's important when you're spending $10 million for the new board members to be able to weigh in on it. And we did have the conversation with Paul and with Rick who felt that if we made the decision in January or beginning of February, we would still be within the time frame to make this a viable project. I think it is a great project. I am equally concerned because there have been a number of projects that have come before this board that were one number and turned out to be exponentially higher and those are unpleasant surprises and I don't know to the degree of which without doing a full $350,000 of engineering you can sharpen your pencil and or do a sensitivity analysis um Paul Bob on on um the different scenarios or different possible outcomes based on different costs. Um I would like to see that

before making a decision and I would like the um new board members to weigh in on this project. On the surface, it's like the um the it's like you're describing, Tom, um you had a $30 million project and it became a $60 million project, but oh, by the way, Fair Life paid for $20 million of it and we got a $20 million grant, so we paid less and we have this great project. This one on the surface appears to be the same thing. You're basically paying $200,000 or $500,000 if I'm reading this correctly for a $9 million project.

Correct.

After the the credit. So, yes.

And then a half a million dollar revenue producer

and and you have the revenue. Yes.

I I just want to make sure that everybody understands.

I appreciate where you're coming from, Tom, and you make some valid points. Um, I I just respectfully have to disagree with you.

And I'll tell you this, I want to make sure Jennifer and everybody understands the new board,

they will ultimately decide on the 9 million 10 million. I want to make sure that's clear. This board,

I mean, I am kicking everything to the new board,

but within reason. We talked about two weeks ago, hey, fine. Don't do 799 Holt Road until the new board. I get it. Guess what? This board went with $400,000 to MRB of engineering Vosberg, which might end up being $7 million. When they come in and show us in in two weeks what Vosberg is, want this board to understand they approved $400,000 for the engineering of Vosber back seven, eight months ago. this board when they come in next on on Friday the or Thursday the 4th or Thursday the 18th and they say hey here's what we estimate it's going to cost you know what board is going to decide in it and chime in on whether they pay the seven million or 8 million or 9 million whatever it'll be next year's board to your point Jennifer in its semantics you said I think the next board should have a say on that 10 million I totally agree with you they will ultimately make the decision on the

9 or 10 million. But I'm saying if this board doesn't approve the $348,000 of engineering and design, we will probably not be in a position because of the time sensitivity for the next board to make that decision. And I can't stress this enough. If there's a hundred things that I have put together for the transition for the new supervisor,

I looked at him and I said, there's really only about three that have they have effects that will affect the community today and for the next 20 years, both tangibly and intangibly. Believe me when I tell you if this board with Barry Dean and Bill Abbott in this configuration of seven or five and us did not go with an energy performance contract and went went with the gut feel of Wix law 30 million engineer it go out for low bid fair life is not in this town that is a fact that is not my opinion that is a fact

I agree

so this board we're everything you're saying you. We can agree to disagree. I just want to make sure you all understand.

We do

that. I don't I you're if we don't approve this tonight, it is tanamount to we are done with this project.

That part I don't agree with. I agree with everything you say up till that point. I don't agree that either.

Okay. Well, I hope you're right.

I

I hope you're right. So, I'll tell you what. Uh, I think Bob and Paul and Rick, unless I'm missing something, we are done with the workshop.

Unless there's any other questions,

we'll stick around. There might be when we get to that resolution.

Happy to stick around.

All right. Thanks. All right. That concludes tonight's workshop. We'll take a fivem minute break, turn the cameras off, and uh we'll be right back.