HomeMy WebLinkAbout3.c. USPCI - Cary PerketCITY OF ROSEMOUNT
EXECUTIVESUMMARY FOR ACTION
CITY COUNCIL MEETING DATE: April 16, 1991
AGENDA ITEM: USPCI Project Report by
AGENDA SECTION:
Cary Perket
Department Heads Report
PREPARED BY: Stephan Jilk, City Administrator
AGEND
)fi
ATTACHMENTS: Letter from Cary Perket
APP 7D/Y:�
Mr. Cary Perket, Project Manager for the USPCI Project would like to speak
to the Council regarding the project' and most specifically a response to
the letter approved by the Council on April 2, 1991.
In a meeting with Mr. Perket I had an opportunity to discuss the key issues
in their consideration of moving the project to the University.
These issues were;
1. Concern that the U of M property will bring with it an added risk
for USPCI and that they will be unable to set themselves' aside
from the contamination issues on the U of M property.
2. costs of upgrading Blaine Avenue to be useable.`
i 3. Costs of extending a sewer connection to the interceptor north of
i County Rd 42.
4. Development costs for'stormwater management.. Because of the
,topography it will be more costly than on their Hwy 55 site.
5 Additional time to get a project "on line".
6. Cost of new environmental studies.
April 9, 1991
Mr. Steve Jilk
City of Rosemount
2875 West 175th Street
Rosemount, MN 55068
Dear Steve:
We request to be placed on the agenda of the Rosemount City Council
for its April 16, 1991 meeting. The purpose of our request is to
provide us with an opportunity to address the council on the concept
of a waste management campus. The discussion will include USPC P s
most current assessment of the feasibility of its participation in
such a waste management campus.
Best wishes,
Cary L. Perket
CLP/cd
RECEIVED
11 I R - " 1991
C:,L L-v,o ., ;gig uFFICE
CITY OF ROSEMOUNT
USPCI/18/910409
KEY TO MAP
Yellow lines show City of Rosemount boundary
Yellow hatched area is our understanding of the area covered by the
September 18, 1990 resolution of the City Council
Solid red squares indicate location of past or current waste
management activities on University of Minnesota property
Shaded area illustrates the area of known ground -water contamination
Green striped area that is in the City of Rosemount and Empire
Township is the proposed site of Dakota County Resource Recovery
project
Blue line represents the Empire Township boundary
Solid red line represents the boundary for City of Coates
USPCII8/issue
Issue #1
The Minnesota Industrial Containment Facility (MICF) is designed to
provide long-term containment of non -hazardous waste. One of the
incentives for a customer to pay a higher fee to utilize the MICF is
to minimize the potential for future liability. Superfund sites are
particularly well noted for their high liability potential. Placing
the MICF on property that could expose its customers to litigation
would undermine the basic purpose in using the facility.'
- Past and current waste management activities limit the
potential locations for the MICF in the area covered by
the City Council resolution of September 18th as well
as most other areas in Rosemount on the University
property.
- One of our concerns about a waste management campus is
that a release from an ajoining facility could be
incorrectly attributed to the MICF.
USPCII8/issuel
Issue #2
The current site is better than any location that has been suggested
on the University of Minnesota property.
Citizen Concerns - Environmental Issues - "What if" Questions?
- Airborne Emissions - MICF expects to be able to minimize
its airborne emissions. The prevailing winds during the
summer are from the southwest. Residents who are south
of the current site would be directly downwind of the U
of M property and would therefore have greater potential
for exposure most of the summer. At the current site,
they are upwind most of the summer.
- Ground Water Release - MICF is designed to prevent
releases to the ground water. The direction of ground
water flow is illustrated on the map. A release that
occurred on the U of M property would also be expected to
flow directly toward residents south of the current site.
The same residents would not be effected by a release
from the current site.
- Stormwater Management - The current MICF site is able,
because of the topography, to handle even extremely large
storms on its property. It would be financially not
feasible to provide the same protection at the University
property. Stormwater drainage from the area would have
to cross property of residents who have already
expressed concerns over stormwater on the current site.
Stormwater at the current site is confined to the
property. The current stormwater plan actually benefits
neighboring property by making more stormwater retention
capacity available on our current site.
USPCII8/issue2
Technical Concerns that have arisen from a Preliminary
Review of the University Property
- Construction of the same basic design would create mounds
on the University property that are four stories high and
clearly visible above the tree lines.
- No sanitary sewer facilities suitable for the MICF exist
on the U of M property. Construction costs would exceed
$400,000 according to very preliminary estimates.
- Currently Blaine Avenue would need to be improved. We
understand the County will pay for this in conjunction
with the Dakota County Resource Recovery facility.
- Substantial stormwater retention ponds would have to be
constructed.
- More acreage would be needed to provide same facilities.
USPCII8/issue2.1
Issue #3
It may not be possible for USPCI to move to the U of M property
because of financial constraints. Any such move would necessitate
major financial costs to USPCI and necessitate financial concessions
from the City of Rosemount.
Current MICF Project
Estimated permitting costs $2.75 million
Purchase price of land $1.00 million
Estimated construction costs $5.00 million
Preliminary Projected MICF if moved to U of M Property
Estimated permitting costs $4.25 - $4.75 million
Interest $ .50 million
Purchase price of land $1.00 million
Estimated construction costs $6.50 million
In addition, USPCI would have to dispose of its current site
which was for sale for 15 years before USPCI purchased it.
A preliminary estimate is that additional costs would be over
$4,000,000. This would roughly mean the MICF needs to recover
in excess of $480,000 per year over a 30 -year life to recover
its investment.
USPCII8/issue3
Issue #4
At the current site, Rosemount receives major financial benefits from
the project with only minor expenses. The move will necessitate major
reductions in USPCI contributions to the City and necessitate City
expenditures for public services.
Current Annual MICF Contributions (based on 75,000 tons) to Rosemount
MICF Service Fee to City $250,000
MICF Contribution to Community Trust $300,000
Property Tax $ 60,000
Net Annual Contribution $610,000
Potential Contribution at U of M Property to Rosemount*
Service Fee to City Significantly Reduced
Community Trust Significantly Reduced
Property Tax
Net Annual Contribution
*Based on $480,000 in additional expenses
Additional Costs to City for U of M Site
Public Services (sewer)
Public Services (water)
Public Services (roadways)
USPCII8/issue4
$ 20,000
$ 70,000 (?)
$ 60,000
$150,000
Issue #5
There are significant administrative obstacles to moving the MICF to
the U of M property.
1. The University of Minnesota is only willing to lease its
property on the Rosemount Research Center. At the end
of the lease, the buildings, etc. must be removed.
Obviously this is not compatible with construction of
long-term containment cells.
2. There are limitations set by the Federal Aviation Agency
on the proximity of land disposal facilities to
airports. Depending on the layout of runways, a future
airport in Rosemount could force the closure of the MICF
if it were on the U of M property.
3. Assuming the purchase of the land could be arranged,
there is still a matter of zoning. USPCI would not be
willing to invest the substantial amounts of money it
requires to begin field investigations for the facility
without the property being zoned for a waste management
district.
USPCII8/issue5
Issue #6
The area where the current site is located is a better area for a
waste management campus. In our opinion, moving the MICF does not
centralize waste management activities but further disperses them
through Rosemount.
- The current site is immediately adjacent to the Rosemount
Wastewater Treatment Plant. This plant will need to be
expanded and made larger as the city grows.
- It is inherent that most industries like those in the
Pine Bend Area will produce industrial wastes.
- There is currently and probably will be in the future,
the need for industry in the Pine Bend area to have
their own wastewater lagoons.
- There are currently other industrial waste management
activities in the vicinity of the site.
USPCII8/issue6
USPCI Annual Contribution to
Rosemount (Based on 75,000 tons/year)
Property taxes
Community trust'
Service feet
Total
$ 61,500
300,000
206,250
$567,750
* Does not include annual park dedication fee.
1 To be distributed by a 5 person board of directors
for community development and improvement.
2 Program revenues to the City.
Projected USPCI Community Trust Fund for Rosemount
(All figures in 1989 dollars)
Annual Contribution Accumulated
Totals $8,465,000
* Paid directly from annual contribution
** Annual distribution at 8% of principal once annual interest exceeds $75,000
Annual Distributions from
Community Trust Fund
75,000 *
75,000 *
75,000 *
75,000 *
75,000 *
77,200 **
101,200 **
125,200 **
149,200 **
173,200 **
197,200 **
221,200 **
245,200 **
. 269,200 **
293,200 **
317,200 **
341,200 **
365,200 **
389,200 **
413,200 **
437,200 **
461,200 **
485,200 **
509,200 **
533,200 **
557,200 **
581,200 **
605,200 **
629,200 **
653,200 **
to fund by USPCI
Principal
Year
1
180,000
105,000
2
260,000
290,000
3
300,000
515,000
4
300,000
740,000
5
300,000
965,000
6
300,000
1,265,000
7
300,000
1,565,000
8
300,000
1,865,000
9
300,000
2,165,000
10
300,000
2,465,000
11
300,000
2,765,000
12
300,000
3,065,000
13
300,000
3,365,000
14
300,000
3,665,000
15
300,000
3,965,000
16
300,000
4,265,000
17
300,000
4,565,000
18
300,000
4,865,000
19
300,000
5,165,000
20
300,000
5,465,000
21
300,000
5,765,000
22
300,000
6,065,000
23
300,000
6,365,000
24
300,000
6,665,000
25
300,000
6,965,000
26
300,000
7,265,000
27
300,000
7,565,000
28
300,000
7,865,000
29
300,000
8,165,000
30
300,000
8,465,000
Totals $8,465,000
* Paid directly from annual contribution
** Annual distribution at 8% of principal once annual interest exceeds $75,000
Annual Distributions from
Community Trust Fund
75,000 *
75,000 *
75,000 *
75,000 *
75,000 *
77,200 **
101,200 **
125,200 **
149,200 **
173,200 **
197,200 **
221,200 **
245,200 **
. 269,200 **
293,200 **
317,200 **
341,200 **
365,200 **
389,200 **
413,200 **
437,200 **
461,200 **
485,200 **
509,200 **
533,200 **
557,200 **
581,200 **
605,200 **
629,200 **
653,200 **
USPCI total annual contribution as
part of city budget
14%
Total city budget for 1991
USPCI Projected annual
contribution to Rosemount
$4,070,773
$ 567,750
USPCI Service Fee* contribution in
relationship to Rosemount's current
annual Internal Revenue Generated.
Rosemount's current Internal Revenue Generated $1,150,577
Future USPCI Service Fee*
* Does not include Community Trust Fund, Park Fees
or Property Taxes.
$ 206,250
USPCI'S Community Trust*
contribution at 75,000 tons per year
in relationship to Rosemount's
current Parks and Recreation budget
Total Rosemount Parks and Recreation budget $552,889
USPCI Community Trust contribution $300,000
*Does not include Service Fees, Park dedication,
and Property taxes.
USPCI contributions compared to an
average Rosemount single-family
home.
The average single family home in Rosemount
has a value of $90,000 with a property tax of
$1,145.
USPCI's annual contribution would amount to
$198 per housing unit per year. This represents
17% of the average property tax for a single family
home.
"Fe.
USPCI
UnionSjbPaah' 'c Corporation
November 6, 1990
Mayor Vern Napper
City df Rosemount
3405 145th Street East
Hastings, MN 55033
Dear Vern,
90USPCI
CO 43 7
I appreciated the opportunity to discuss with you and Steve Jilk your
concept of a waste management campus. USPCI, Inc. agrees that the concept
of a waste management campus is interesting. However, there are many
issues that must be addressed before such a campus could be established.
We would like to take this opportunity to present some of the issues that
must be addressed before such a concept could become a reality.
Location
As you know, there are a number of ongoing waste management activities
being carried out in the Pine Bend area at this time. These activities
would tend to make the Pine Bend area a more suitable location for a waste
management campus. First the Rosemount wastewater treatment plant is
already located in the area. it is very unlikely that significant
residential development will ever occur next to the sewage plant. The
heavy industries now located in the area already operate their own
industrial wastewater treatment plants as well as their other industrial
and hazardous waste management activities. In addition to these
activities, the Pine Bend area now has a foundry which recycles scrap
metals. The Minnesota Industrial Containment Facility would only be
another component of the already operating waste management campus.
It is our opinion that centralizing the waste management activities on
the University of Minnesota land, if not impossible, would be at best
extremely difficult, as a result of the existing uses in the Pine Bend
area. There are many advantages of having a waste management campus
located in the Pine Bend area, which range from environmental issues to the
reduced financial demands it would place on the City of Rosemount.
Community Support
There has been very little public discussion and no opportunity for
input from the community regarding, the waste management campus concept, at
least not to the degree that is normally associated with environmental
projects of this scope. In order to get the public input that a project of
the scope being proposed will require, public discussions should begin in
the very near future, as they will probably continue for several months.
515 West Greens Road, Suite 500 - Houston Texas 77067.713-775-7800
If broad based public support for the campus concept can be
demonstrated, it would make the cost associated with the implementation of
such a project much easier. As will be discussed later, both Rosemount and
USPCI would face considerable costs to make such a campus work on the
University of Minnesota property. The additional costs USPCI would incur
in a move to the university property was not considered when the Company
negotiated its agreement with the City of Rosemount.
University of Minnesota Site
At the present time, there is insufficient information to judge whether
or not the University of Minnesota property is suitable for the
construction of our containment cells. The necessary information could
only be determined by undertaking an engineering and hydrogeologic
investigation of the site within the University of Minnesota property.
Because of the costs associated with such a study, neither the City nor
USPCI could undertake such a study unless contractual commitment for
purchase of the property could first be obtained from the university.
Environmental Liability
Environmental liabilities are a major concern that must be addressed
when considering a waste management campus located on the university
property. There does not appear to be a legal mechanism for protecting new
owners from claims arising from previous waste management activities at the
site. The City of Rosemount, if it purchases the land, would become liable
for any future environmental claims. Similarly, any private party could
also become liable if they were to purchase the property.
Scope of Liability
Without a mechanism to protect the new owners from liability, it
becomes very important that the full extent of any liability be
established. Located on the 1100 acres addressed in the council's
resolution are several operating small businesses. It would be prudent on
the City's part to evaluate the operation of each of these businesses
before purchasing the land. Areas that are no longer' in use would also
need to be thoroughly reviewed. In addition, there is the ever growing
problem of asbestos abatement in older buildings. Obviously, an
environmental review of this magnitude will be both expensive and time
consuming.
Timing
Even relatively simple real estate transactions sometime require months
to negotiate because of environmental reviews. Given the fact that the
parcel, described in the City Council resolution of September 18th,
involves over 1,000 acres, with numerous buildings, and waste sites still
to be remediated, the prospect is for a lengthy, prolonged negotiation to
reach a purchase agreement. Considering the liability issues, there is no
guarantee that a purchase agreement could be negotiated. In which case,
any investment in evaluating the property would be wasted.
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The draft Environmental Impact Statement (EIS) for the Minnesota
Industrial Containment Facility (MICF) is scheduled to be released in
November and all permits are expected to be submitted by year end. It is
expected that all permits could be issued in the spring of 1991. Recent
public statements from the university indicated it would take six to nine
months for a purchase agreement. USPCI could have its permits at the
current location before a purchase agreement could be reached.
Rosemount Public Services Expenses
Preliminary review of the property indicates that Rosemount public
services would have to be extended to the area. Blaine Avenue extending
south from Highway 42 would have to be upgraded and city sewage service
would also have to be brought into the site. ` We have obtained a rough
estimate that it would cost in excess of $400,000 to construct a sewer line
to the waste management campus. It is our understanding that Blaine Avenue
would be improved by the county, if the Resource Recovery Facility is
built. However, if the Resource Recovery Facility is not built, then the
City of Rosemount would have to spend in excess of one million dollars to
upgrade Blaine Avenue.
USPCI Development Costs
USPCI has spent in excess of $2.8 million in its efforts to permit the
facility at its current location on Highway 55. While some of the EIS,
permitting, and design activities could be modified for use at your
proposed location, extensive additional work would be required for this new
location. An example is the extensive hydrogeologic study that will be
required because the university property has been designated as a Superfund
site. We believe that a study of this magnitude could easily cost between
$1.5 to $2.0 million.
In addition, .substantial additional costs could be incurred in the
construction of the containment cells if contaminated soils are encountered
during construction. The soil would have to be disposed of as hazardous
waste. There is also the potential that if significant contamination is
found, the project might have to be abandoned.
Financial Opportunity Lost
Both Rosemount and USPCI will experience financial losses if the MICF
project is delayed. Rosemount will not receive community services fees and
no contribution will be made to the Community Trust Fund until waste is
being received at the facility. USPCI would not receive a carrying cost
for its current investment at the existing site for both permitting and the
purchase of the land. These costs are between $250,000 and $300,000 per
year.
• - 3 -
Rosemount City Service Fee
As you are aware, USPCI has agreed to pay the City of Rosemount a fee
of $2.75 per ton of waste disposed of at the MICF. This fee was negotiated
on the basis of permitting cost associated for the Highway 55 location. A
move to the university property would increase the MICF development costs
to more than four million dollars. In addition, there is the previously
mentioned carrying cost on the investment of permitting and land. It would
be necessary to reduce the city service fees as well as provide other
incentives in order to make such a move financially possible.
Cooperation
USPCI is willing to work with the City to explore the waste management
campus concept. Our initial opinion is that such a campus would be best
situated in the Pine Bend area for all of the above stated reasons. The
obstacles are individually significant enough to make a waste management
campus on the university property not feasible and we believe that when all
of the obstacles are combined, they will make the project all but
impossible.
In the same spirit of cooperation, USPCI would expect the City to
continue to review and process the permits on the current site in a timely
manner. Portions of the final permit application will be submitted this
month. This would, from a scheduling standpoint, allow the permits to be
issued early this spring in time for summer construction.
This timing provides sufficient time for the campus concept to be more.
closely reviewed independent of our permitting effort. If the City and
USPCI can develop a mutually agreeable campus concept, both would want to
participate in it willingly. We look forward to working with you on our
permit and exploring the concept of a waste management concept.
Regards,
DSPC
Ken Ja son
Senior Vice President
Business Development
KJ:jr
Rosemt7
- 4 -