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Millwork District Energy PlanT®: The Honorable Mayor and City Council Members FR®IVI: Michael C. Van Milligan, City Manager SlJ JECT: Approval to Hire a Consultant for a District Energy Analsyis for the Dubuque Historic Millwork ®~,TE: April 17, 2009 Economic Development Director Dave Heiar is recommending selection of 1=VB Energy, Inc. as the consultant to provide a district energy analysis for the redevelopment of the Historic Millwork District. The purposed price with reimbursables is $64,965, which is within the City's budget of $65,000. I concur with the recommendation and respectfully request Mayor and City Council approval. ~ - ---~ . Michael C. Van Milligan MCV'M/jh Attachment cc: Barry Lindahl, City Attorney Cindy Steinhauser, Assistant City Manager David Heiar, Economic Development Director INTRQDl1CTl®hl The purpose of this memorandum is to request City Council approval of hiring a consultant to provide a district Energy Analysis for the redevelopment of the Dubuque Historic Millwork District. Bi4Cl°CGR®l1N® As an outgrowth of the Envision 2010 process, members of the committee saw the need to define the Warehouse District through a master plan process. Both the public and private partners have sensed the need to define the long range plan for the district, to anticipate and guide future investment and to ensure quality development. The committee, property owners and City staff also prepared the Warehouse ®istrict Revitalization Strategy that was approved by the Dubuque City Council on August 6, 2007. The first goal of that strategy was to develop a Master Plan for the Warehouse District. The City Council authorized a contract with the Cunningham Group of Minneapolis to prepare a Master Plan for Warehouse District. The Cuningham Group work began with a two day (June 25-27) visit to the community where several focus groups were conducted to quickly learn about the Historic Millwork District and to get community input. The consultants met with the business community, city staff, the City Council, property owners, the Envision 2010 committee, Dubuque Main Street, a general public meeting inviting the entire community and other stakeholders for their input. Cuningham then gave a presentation to the steering committee to outline what they had learned from the visit and gave a rough design of what they considered to be the next steps to developing the plan. City staff then provided direction over the next few months to prepare for the second input trip held October 7-8, 2008. The same focus groups met again with the consultants to be exposed to the work to date and a preliminary development summary for the district. A draft of the Master Plan was delivered to City Staff and the Steering committee for their review at the end of December 2008. The committee met and gave their comments on the plan to the consultants and those comments have been incorporated into the plan. The City Council held a worksession on February 2, 2009, to discuss the plan. Andrew Dresdner of the Cuningham Group, and Chris Brewer of ERA gave a presentation of the key components of the plan. Comments were received and changes were made to the document reflecting those comments. The Council adopted the Master Plan on February 16, 2009. One of the recommendations of the Historic Millwork Master Plan was to analyze the district for the potential development of a district wide energy system, defined by 12t" Street on the north to 5t" Street on the south, White Street on the west and the Hwy 61- 151 corridor on the east. On March 16, 2009 the City Council authorized an RFP seeking a consultant or two consultants that have experience in several disciplines. The study is broken into two major elements as follows: A. Technical Assessment ® Demand Forecast ® Business as Usual Analysis ® Potential Heat Source ® Energy Distribution System ® Metering Technology B. Business and Economic Analysis ® Ownership and Operating Model ® Project Financing ® Pricing Structure, Developer Participation and Flexibility Mechanisms ® Financial Projections Lega! and Regu!ato ,~ Issues ® Risk Management Plan ® Work Plan for Phase I of Energy System ® Assessment of Sustainable Benefits A committee was established to review the RFP's, and interview the consultants. The committee consisted of the following members; Aaron DeJong, Economic Development David Heiar, Economic Development Cindy Steinhauser, City Manager's Office ® Laura Carstens, Planning Services ® Paul Schultz, Resource Management Coordinator ® Steve Brown, Engineering, Project Manager ® Sheila Samuelson, Sustainability Coordinator ® Jill Connors, Property Owner Representative ®ISCtJSSI®IV The city received four proposals from the following consultants: Sebesta Blomberg/Alliant, Cedar Rapids Hammel, Green, and Abrahamson, Inc. (HGA), Minneapolis FVB Energy, Inc./Kandiyohi Development Partners (KDP), Minneapolis Durrant Group, Inc., Dubuque All four firms were interviewed. Following the interviews, review of the proposed costs, and reference checks, the committee unanimously selected FVB Energy, Inc. and KDP as the firms to recommend to the City Council. Two of the firms, including this proposal, established fees just below the $65,000 allowance in the City's budget for this service. (see attached sheet detailing costs) FVB Energy Inc. is an engineering firm specializing in district energy and combined heat and power (CHP) systems, with offices in Minneapolis (USA), Toronto and Edmonton (Canada), Manama (Bahrain) and Stockholm, Vasteras and other cities in Sweden. This firm has the breadth and depths of experience needed to help the City of Dubuque develop a prudent and sustainable energy system for the Historic Millwork District. FVB Energy, Inc. has a leading reputation in district energy and is based on years of specialized experience in district energy business analysis, engineering, management, marketing and energy and environmental policy. The firm brings the benefits of European experience and expertise in district energy systems, particularly hot water district heating and CHP, together with North American business, financial and marketing expertise to assist clients in energy system planning, development and implementation. Extensive experience in district energy will enable the firm to provide ahigh-quality and timely analyses that will help the City of Dubuque develop a prudent and sustainable energy system for the Historic Millwork District. As experienced professionals in sustainable development, the firm believes in the potential of district energy as a key component for driving high quality redevelopment strategies. Property structured and implemented, district energy can leverage further private and public investment to create an urban showcase that is environmentally advanced while respecting the historic character of the area. FVB Energy is coordinating this proposal with Kandiyohi Development Partners (KDP), who will focus on the Business and Economic Analysis component of the Initial Analysis. The coordinated team can deliver ahigh-quality, well-integrated and timely Initial Analysis. Kandiyohi Development Partners, LLC and FVB have a history of working together on the technical aspects and development of the financial and business case for district energy systems and combined heat and power facilities. The two firms have experience that is directly relevant to the goals of this project in Dubuque and have offices three blocks apart from each other in downtown Minneapolis. This team has successfully submitted grant and loan requests for federal and state funding sources and assembled project financing. KDP is a development and consulting firm that focuses on renewable energy and sustainable development. KDP's principals have more than 50 years of combined experience in sustainable community development and the firm's strength is its ability to align the requirements of private capital and the market place with the interests and goals of policy makers and the community. KDP has been a developer of smaller-scale biomass energy facilities that include a district energy component. KDP has also been involved in more than a dozen development projects in which green building and land use strategies, generally certification in Leadership in Energy and Environmental Design (LEER), have been primary goals of the project. KDP is an excellent choice as the business development and financial consultant for the project because of their diverse background and experience. KDP focuses on creative, entrepreneurial solutions to energy and environmental challenges. From ideas and answers that can be applied to an individual project or a single community to issues that face the entire planet, they bring innovation, a global network of best practices and a deep level of understanding about sustainability to our project. KDP has experience with creating balanced solutions that meet the needs of private capital investments as well as the goals of policy makers and local communities. The firm brings creativity as well as practicality to the project team and can enhance the quality, marketability and success of the Millwork District Energy Project. FVB Energy and KDP understand the City's interest in responding quickly to the opportunities presented by IBM's decision to establish a new service center in downtown Dubuque with 1,300 employees. Both firms also recognizes the need to prepare some critical information for the City to consider in submitting a grant to the Iowa Power Fund and other funding sources that may be available very shortly through several federal and state initiatives. A quote from the cover letter submitted by FVB Energy summarizes why this firm's proposal stood head and shoulders above the others. "A great deal of high-quality planning and thinking has already been done regarding the future of the Millwork District and we intend to use these goals and innovative plans as a foundation for our analysis of district energy. As a community, Dubuque has clearly embraced the principles of sustainability and our team's experience will respond to those principles and is, in fact, one of the greatest strengths of our proposal." RECMMEN®~-°TIN ®n behalf of the committee, we recommend approval to hire FVB Energy, Inc. as the consultants to analyze the Historic Millwork district energy opportunities. e4C1°I®IV STEP The City Council is requested to approve a contract with FVB Energy, Inc. and authorize the Mayor to sign the contract F:\USERS\DHeiar\Warehouse District\Approval of RFP for District Energy Analysis memo2.docx Q L C W V .~ a~ ~_ V .~ O 2 c~ ~ o 00 0 0 ~ o ~ ~ coo m o ~ ~ N N O N ~ ~ d' d' N (n ~ ff} {~} H} tf} ~} ff} O Ln O O ~ ~ m 00 d^ ~ 00 > > L.L 4f} {f} {~ {~} ~ {~} O (LO ~ O O O O O' ,._ N 00 00 CO O ~ `~ 00 d~ ~' O a7 ~' ~ ?'+ ~ a--~ (6 N .N C ~ (6 ~ Q N N i N a ~ ~' ~ C_ C to O N ~ f0 N p ~ O ~ Q ~ Q ~ fn ~ i = Q ~ = ~ ~ ~ ~ ~ "~ N ~ N ' ~ ~ O (6 ~ N ~ • '~ C ~ >, bA L O O by (6 ~ ~ ~ O O N ~ Cfl 0 ~ ~ W ~ W (6 ~ .-I N c~ d' ~ COI m 0 d' N {fl. 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