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Home My WebLink AboutFR/SR Exhibit 5Legislative Matter Page 1 of 6 Miami -Dade Legislative Item File Number: 060577 Printable PDF Format File Number: 060577 Version: 0 File Type: Resolution Status: Adopted Reference: R-317-06 Control: County Commission File Name: TECO THERMAL SYSTEMS, INC. AMENDMENT Introduced: 2/27/2006 Requester: General Services Cost: Final Action: 3/9/2006 Administration Department Agenda Date: 3/7/2006 Agenda Item Number: 8F1 D Notes: Amended Title: RESOLUTION AUTHORIZING THE EXECUTION OF A REVISED 2/24/06; AND AMENDED CONTRACT FOR $9,325,000.00 FOR SALE AND KGM PURCHASE BETWEEN TECO THERMAL SYSTEMS, INC., AS SELLER, AND MIAMI-DADE COUNTY, AS BUYER, OF THE TECO DISTRICT COOLING PLANT LOCATED AT 1110 NE 1ST AVENUE INCLUDING LAND, EQUIPMENT, SYSTEM FACILITIES, BUSINESS FIXTURES AND PERSONAL PROPERTY FOR THE PURPOSE OF PROVIDING CHILLED WATER SERVICE; AUTHORIZING THE COUNTY MANAGER TO EXECUTE SAME FOR AND ON BEHALF OF MIAMI-DADE COUNTY IN SUBSTANTIALLY THE FORM ATTACHED HERETO, AND AUTHORIZING THE COUNTY MANAGER TO EXERCISE ANY AND ALL RIGHTS CONFERRED THEREIN Indexes: AMENDMENT TO CONTRACT Sponsors: NONE Sunset Provision: No Effective Date: Registered Lobbyist: None Listed Expiration Date: Legislative History Acting Body Date Agenda Action Sent To Due Date Returned Pass/Fail Item Board of County 3/9/2006 8F1D Adopted P Commissioners Board of County 3/7/2006 8F1 D Deferred 3/9/2006 P Commissioners httn•//.uww no miami-dade.fl.us/govaction/matter.asp?matter=060577&file=true&yearFold... 3/27/2006 Legislative Matter Page 2 of 6 REPORT: Chairman Martinez requested that Assistant County Manager Joseph Ruiz provide additional information on the financial terms of the contract by Thursday, March 9, 2006. County Attorney 2/28/2006 Assigned Thomas 2/28/2006 Goldstein REPORT: "NED" County Manager 2/27/2006 Assigned Joe Ruiz 2/27/2006 2/27/2006 County Manager 2/27/2006 REPORT: GSA(AMENDED 2/27/06) Assigned County 3/7/2006 Attorney Legislative Text TITLE RESOLUTION AUTHORIZING THE EXECUTION OF A REVISED AND AMENDED CONTRACT FOR $9,325,000.00 FOR SALE AND PURCHASE BETWEEN TECO THERMAL SYSTEMS, INC., AS SELLER, AND MIAMI-DADE COUNTY, AS BUYER, OF THE TECO DISTRICT COOLING PLANT LOCATED AT 1110 NE 1ST AVENUE INCLUDING LAND, EQUIPMENT, SYSTEM FACILITIES, BUSINESS FIXTURES AND PERSONAL PROPERTY FOR THE PURPOSE OF PROVIDING CHILLED WATER SERVICE; AUTHORIZING THE COUNTY MANAGER TO EXECUTE SAME FOR AND ON BEHALF OF MIAMI-DADE COUNTY IN SUBSTANTIALLY THE FORM ATTACHED HERETO, AND AUTHORIZING THE COUNTY MANAGER TO EXERCISE ANY AND ALL RIGHTS CONFERRED THEREIN BODY WHEREAS, this Board desires to accomplish the purposes outlined in the accompanying memorandum, a copy of which is incorporated herein by reference, NOW THEREFORE, BE IT RESOLVED BY THE BOARD OF COUNTY COMMISSIONERS OF MIAMI-DADE COUNTY, FLORIDA, that this Board hereby approves a Revised and Amended Contract for Sale and Purchase, in the amount of $9,325,000.00, between TECO Thermal Systems, Inc., a Florida for -profit corporation and Miami -Dade County of approximately 45,221 square feet of land and a Chilled Water System Plant located at 1110 NE 1st Avenue for the purpose of providing chilled water service to primarily County -owned facilities; authorizes the County Manager to execute the same for and on behalf of Miami -Dade County; and authorizes the County Manager to exercise any and all other rights conferred therein. HEADER Date: To: Honorable Chairman Joe A. Martinez and Members, Board of County Commissioners From: George M. Burgess httn://www. co.miami-dade. fl. us/govactionlmatter. asp?matter=0 60 5 77&fil e=true&yearFold... 3/27/2006 Legislative Matter County Manager Page 3 of 6 Subject: Revised and Amended Contract for Sale and Purchase of District Cooling Facility Located a t 1110 N.E. First Avenue, Miami, from TECO Thermal Systems, Inc. for $9,325,000 STAFF RECOMMENDATION It is recommended that the Board approve the attached revised and amended Contract for Sale and Purchase with TECO Thermal Systems, Inc. (TECO) for the acquisition of TECO's District Cooling Facility located at 1110 N.E. First Avenue, together with all existing offsite improvements used to distribute chilled water to its customers for $9,325,000. This revised contract provides for an adjustment in the purchase price in the amount of $300,000 to assist TECO in providing the City of Miami with compensation for lost revenues due to the sale of the facility to the County and also amends various action dates and the closing date to allow for formal action by the City to approve the sale. On February 7, 2006 the Board approved the original Contract for Sale and Purchase of the District Cooling Facility from TECO "conditioned upon approval by the City of Miami". The City of Miami will lose $1,200,000 at net present value as a result of the sale to the County due to termination of the franchise fees paid by TECO's customers. The collection and payment of franchise fees will cease when the facility is purchased by the County. The City has agreed to accept $1,100,000 for the loss of revenues. TECO has agreed to pay the $1,100,000 subject to the County increasing the purchase price of the Facility by $300,000. TECO and the County will be unable to complete the transaction if the City withholds approval. Therefore, to assist TECO in resolving the issue and enable the closing to proceed, the Contract for Sale and Purchase has been revised and the purchase price has been increased to partially offset the payment TECO is making to the City. MANAGER'S BACKGROUND SELLER: TECO Thermal Systems, Inc. COMPANY PRINCIPAL: R. Bruce Christmas, President/Director TAX FOLIO NUMBER: 01-3136-016-0150 LAND SIZE: 45,221 square feet, or 1.04 acres, more or less LOCATION: 1110 N.E. 1 Avenue COMMISSION DISTRCT: 3 ZONING: Liberal Commercial AMENDED PURCHASE PRICE: $ 9,325,000.00 APPRAISED VALUES: $10,260,000.00 $10,500,000.00 FINANCING SOURCE: Financing to be repaid by revenues generated by plant operations http://www.co.miami-dade.fl.us/govaction/matter.asp?matter=060577&file=true&yearFold... 3/27/2006 Legislative Matter Page 4 of 6 CLOSING DATE: Not later than April 30, 2006, unless otherwise mutually agreed DESCRIPTION OF FACILITIES: Constructed in 1999 by FPL Energy Services, and purchased by TECO in 2001, the facility contains 28,644 square feet of improvements, specifically designed and constructed to operate as a commercial district chiller plant. The building is divided into a small office and conferencing area, an electronic monitoring and control room, and the plant area itself, which contains high -efficiency equipment for cooling water, and the making and storage of ice. The plant is in excellent condition, and all improvements are fully functional and meet or exceed current industry design and construction standards for this type of facility. Power is routed to the facility from two separate FPL substations, providing improved reliability of service. The plant's equipment is operated by a state-of-the-art electronic control system with remote monitoring, alarming and diagnostic capability. Purchased assets also include an offsite network of buried 24" main distribution lines constructed of concrete lined steel pipes with external insulation, which connect to the American Airlines Arena (AAA) and the Network Attachment Point of the Americas (The NAP). In addition to the piping, a 2" conduit of fiber optic cabling runs throughout the network, connecting each chilled water end -user to the plant for "real-time" consumption metering and operations monitoring. JUSTIFICATION: At its meeting of July 7, 2005, the Board approved six agenda items authorizing the proposed Overtown Village Development at the Overtown Metrorail Station. In the accompanying report, staff noted that a part of that project would entail "increasing the capacity of the County's chilled water distribution system to immediately accommodate Overtown Towers I and II and eventually service the new Children's Courthouse." The acquisition of the TECO District Cooling Facility, recommended on today's agenda, provides the required capacity in the most timely, cost effective and pragmatic manner possible. County -owned buildings (and the "Old" Miami Arena") in the Downtown Government Center are currently cooled from chilled water produced at a County -owned and GSA -managed district cooling facility located at 201 NW First Street. Originally constructed in 1984, this facility today utilizes electric chillers to provide chilled water for air conditioning to what has, over the years, grown to ten County -owned buildings totaling 2.5 million square feet, plus the "Old" Miami Arena. The three planned facilities total over 800,000 square feet and present a substantial added demand for air- conditioning, a demand which the County chiller plant, with its existing equipment, does not currently have the capacity to serve. The initial plan for serving these additional facilities was through the expansion and upgrade of the existing County plant, which is projected to cost just under $10 million. Following a thorough review by staff and its engineering consultants, this initial strategy was reassessed when the opportunity arose to consider the purchase and expansion of the TECO facility. The negotiated TECO alternative is projected to cost approximately $20.325 million - $9.325 million for the purchase, $9.2 million for the subsequent plant expansion, and $1.5 million for the interconnection of the TECO and County chilled water loops. (The above purchase price includes the $300,000 price increase to assist TECO in providing the City of Miami with compensation for lost revenues. In spite of the substantially higher initial capital expense, it is the conclusion of staff that the TECO plant purchase/expansion alternative is the superior approach, for the following reasons: Lower operating expense. Operating expense for the TECO plant is approximately 25% less than at the 11 vie /nnvartinn/matter acn9matter=060577&file—true&vearFold... 3/27/2006 Legislative Matter Page 5 of 6 County facility, almost entirely due to a lower cost of electricity. The TECO plant uses thermal technology (e.g. melting ice) to cool water, and a "time of use" rate tariff, which charges different rates for on -peak and off-peak periods, During off-peak periods, when electricity costs are much lower (e.g. at night), the TECO plant operates high -efficiency water chillers for real-time cooling while, at the same time, running special glycol chillers to produce ice slurry that is stored in a large tank. During on - peak periods, when electricity costs are high, chiller equipment is shut down and the water is cooled by circulating it through pipes in the ice tank. This reduces electrical usage during peak hours by as much as 90%. The existing County plant lacks the space needed for ice storage, and would not benefit from FPL's "time of use" tariff. Ease of expansion. The TECO facility was designed in "equipment modules" for easy and cost- effective expansion. Presently built out to 1/3 of its total production capacity, the unimproved area is well -sized to handle the loads required by the County, i.e. all of the buildings currently served by the existing County plant, and the three new buildings scheduled for occupancy during the next few years. Due to the current design and layout of the County plant, the required expansion for the additional facilities would require more design and planning. It would also require a replacement of much of the plant's present aging equipment. Existing TECO chilled water sales contracts. As a part of this transaction, TECO will be assigning three existing long-term chilled water sales contracts, with: Network Attachment Point of the Americas (NAP), Technology Center of the Americas (TECOTA), and American Airlines Arena (AAA). These contracts, the initial terms of which do not end until 2021 (NAP), 2029 (AAA), and 2031 (TECOTA), provide the County with a long-term stream of net revenue over expense in excess of $1.2 million per year. FUNDING/FINANCIAL IMPACT: Staff from GSA and the Office of Strategic Business Management has conducted a 15-year financial analysis of this transaction. Because the existing chilled water system lacks the capacity to serve future County improvements, either an upgrade to the existing system or purchase of a new facility must be made prior to completion of the new facilities. When compared to an upgrade of the County plant, purchasing the TECO facility presents a savings to the County of approximately $6.9 million over the 15 years analyzed. Staff plans to finance the $9.325 million purchase and $9.2 million of additional build -out over a 15-year timeframe, an agenda item for which will be presented to the Board at a subsequent meeting. Additionally, $1.5 million previously approved by the Board for the Overtown Development project will be used to interconnect the TECO and County chilled water loops. The savings afforded by more efficient production of chilled water, when added to the revenues from existing contracts for the sale of chilled water to outside entities, provides enough funding for the required debt service payments. COMMMENTS: The Contract includes the assignment to the County of various necessary agreements, including District Cooling Service Agreements (with the three customers), an Access and Easement Agreement with TECOTA, and a Service Agreement with BGA, Inc. (for the interim management, maintenance and operation of the plant until the expansion of the plant and interconnection of the distribution loop with the County's existing loop is complete). BGA, Inc., formerly TECO Energy Services, is an independent energy services firm with substantial experience in the design, management and operation of district cooling facilities. BGA has managed the plant for TECO Thermal Systems since the purchase of the plant from FPL in 2001. This acquisition will enable staff to avoid upgrading the existing County plant, which will be necessary h,+,,. //mural rn miami-dade.fl.us/eovaction/matter.asp?matter— 060577&file=true&yearFold... 3/27/2006 even without the additional buildings, within a few years. Instead, the existing equipment will be maintained, at modest expense, as a back-up or emergency cooling option for the County buildings, a use more -suited to the age of the equipment. 1H4a I Rae0d85. 1 hAirtAS 1 Legislative Search 1 4.9.bby SiR@gIS1ra!L4.h. 1 Legl la i e Reports 2U91JCC e. ing.gLendal I tvkamidi-Dade Coon y Code aQr inapces one 1 u.sie_gQ l" its 1 Alzatl 1 .P_.L.o aicecig[y 1 ?AVM. 1 oil, lr imer E-mail your comments, questions and suggestions to Webmaster Web Site ® 2006 Mlami-Dade County. All rights reserved. i http://www.co.miami-dade.fl.us/govaction/matter.asp?matter=060577&file=true&yearFold... 3/27/2006