Loading...
HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 03/15/2005 - SECOND READING OF ORDINANCE NO. 034, 2005, AUTHORI ITEM NUMBER: 15 AGENDA ITEM SUMMARY DATE: March 15, 2005 FORT COLLINS CITY COUNCIL STAFF: John Armstrong Kathy Valdez SUBJECT Second Reading of Ordinance No. 034, 2005, Authorizing the Lease of City-Owned Property at 3829 East Prospect Road, Fort Collins, Colorado, to Frontline Bioenergy. RECOMMENDATION Staff recommends adoption of the Ordinance on Second Reading. EXECUTIVE SUMMARY Vacant buildings suitable for industrial uses are located on the Resource Recovery Farm property (RRF), which was transferred from Utilities to the Natural Areas program for use as open space in 2003. Frontline BioEnergy, which is working to develop innovative technology and integrate systems that convert biological waste materials (biomass) into useful energy products such as hydrogen through thermal or microbial processes, is interested in using certain of the buildings at RRF. Frontline BioEnergy offers proven research methods, design and manufacturing expertise, and system integration. In furtherance of the City Council adopted policy of encouraging development of and implementing hydrogen-related projects in Fort Collins, and funds have been budgeted for Utilities' use for hydrogen fuels projects. Utilities has proposed to use a portion of those funds to assist Frontline BioEnergy in acquiring this lease space from the Natural Areas program for the start-up of its operations. The lease would include the following: both levels of the office, consisting of 2,106.88 square feet, 2,450.09 square foot section of the shop, and an outside area on which the tenant would construct a temporary open front pole shed, together with a small amount of parking area. Ordinance No. 034, 2005, was unanimously adopted on First Reading on March 1, 2005. ORDINANCE NO. 034, 2005 OF THE COUNCIL OF THE CITY OF FORT COLLINS AUTHORIZING THE LEASE OF CITY-OWNED PROPERTY AT 3829 EAST PROSPECT ROAD, FORT COLLINS, COLORADO, TO FRONTLINE BIOENERGY WHEREAS,the City of Fort Collins,Colorado(the"City") is the owner of property known as the "Resource Recovery Farm," located at 3829 East Prospect Road, Fort Collins, Latimer County, Colorado (the "Property") more particularly described on Exhibit"A" attached hereto and incorporated herein by this reference; and WHEREAS,this Property was previously used by the City's Wastewater Utility for its land disposal "sludge farm" project, but the Property has since been transferred to the Natural Areas program for use as open space in accordance with Ordinance No. 098, 2003; and WHEREAS, Frontline Bioenergy has proposed to lease certain buildings and areas on the Property for use in the development of biomass-based hydrogen fuels and related processes,and has worked with City staff to identify the particular portions of the buildings and the Property that are most suitable for its initially intended activities,together with certain additional areas that Frontline Bioenergy may be able to use in the future for its operations(collectively referred to as the"Leased Premises")and shown on Exhibit`B"attached hereto and incorporated herein by this reference;and WHEREAS, leasing the Leased Premises to Frontline Bioenergy will be a benefit to the community by contributing to the City's local economic vitality, as well as national and global sustainability; and WHEREAS, on February 18, 1997, the City Council, by Resolution 1997-025, adopted the Community Visions and Goals 2015, City Structure Plan, and City Plan Principles and Policies as elements of the Comprehensive Plan of the City, also known as "City Plan", which supports improving air quality, reducing motor vehicle emissions, encouraging and facilitating increased energy efficiency and use of renewable resources, and cooperation among independent community organizations; and WHEREAS,on April 1, 1997,the City Council adopted Resolution 1997-051 providing that as a user of energy,the City shall regularly evaluate the latest technologies utilizing alternative fuels for transportation and, to the greatest extent practicable, apply such technologies to the operation of City vehicles in order to provide energy efficient transportation; and WHEREAS, Resolution 1997-051 also provides that as community leader, the City should also regularly evaluate means by which City-wide demand and usage of fossil fuels can be reduced and should attempt to develop means by which it can further such goals, through the City's role as educator, promoter and regulator; and WHEREAS, on November 16, 1999, the City Council adopted Resolution 1999-137 establishing a policy to take cost-effective actions that benefit the community to reduce local greenhouse gas emissions; and WHEREAS, the City anticipates that increased use of hydrogen will provide benefits to the citizens of Fort Collins such as improved air quality, reduced greenhouse gas emissions, reduced dependence on imported oil,and retention of the proceeds from energy consumption in the local and state economy; and WHEREAS,the City is in a unique position to attract hydrogen-related projects and funding, due to the potential for region partnerships, development of the Mason Street Corridor, a favorable testing environment for technologies with high altitude and extreme weather variation, and access to local sources of hydrogen; and WHEREAS,on March 19,2002,the City Council adopted Resolution 2002-027,establishing a policy to implement hydrogen-related projects within the City, and directing the City Manager to explore partnerships that would facilitate the creation of hydrogen projects; and WHEREAS, the City's Utilities have budgeted and planned for certain funds to be used to promote the development of hydrogen fuels projects in Fort Collins, because of the significant benefits to the ratepayers of the electric utility that are expected to result from the development of the capability to locally produce alternative and renewable fuels and from the potential for local distributed power generation; and WHEREAS, the proposed use by Frontline Bioenergy of the Leased Premises will provide significant assistance to Frontline Bioenergy in its development of the project described herein; and WHEREAS, development of a successful bioenergy facility could lead to the diversion of a substantial volume of biomass from the Larimer County Landfill in the future,consistent with the City's solid waste management objectives; and WHEREAS, City staff has negotiated a lease agreement with Frontline Bioenergy that provides for use of the Leased Premises for up to three years and providing for certain protections and requirements to protect the City's interests, a copy of which lease agreement, dated February 25, 2005 (the "Lease Agreement"), is on file in the office of the City Clerk and available for public inspection; and WHEREAS, the Lease Agreement provides that the City will be a preferred customer for purchase of hydrogen from the Frontline Bioenergy project, and further provides that Frontline Bioenergy will work with Utilities staff to provide support and education related to biofuels research and usage; and WHEREAS, under Section 23-111 of the Code of the City of Fort Collins, the Council is authorized to lease any and all interests in real property owned in the name of the City,provided that Council first finds by ordinance that the lease is in the best interests of the City. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF FORT COLLINS as follows: Section 1. That the Council hereby finds that the lease of the Leased Premises to Frontline Bioenergy as provided herein is in the best interests for the City of Fort Collins. Section 2. That the Council hereby finds that the use of Utilities funds to provide lease assistance to Frontline Bioenergy as described herein,in light of the various policies and the benefits to be gained by the promotion of local hydrogen fuels resources described herein, is of benefit to the Utilities and will be of benefit to the ratepayers of the Electric Utility. Section 3. That the City Manager is hereby authorized to execute a lease agreement for the lease of the Leased Premises to Frontline Bioenergy,consistent with the terms of this Ordinance and in a form substantially similar to the Lease Agreement, together with such additional terms and conditions as the City Manager, in consultation with the City Attorney, determines to be necessary and appropriate to protect the interests of the City. Section 4. That all amounts paid by Utilities and Frontline Bioenergy for the use of the Leased Premises shall be deposited in the Natural Areas Program Fund. Introduced, considered favorably on first reading, and ordered published this 1st day of March, A.D. 2005, and to be presented for final passage on the 15th day of March, A.D. 2005. Mayor ATTEST: City Clerk Passed and adopted on final reading this 15th day of March, A.D. 2005. Mayor ATTEST: City Clerk ITEM NUMBER: 17 AGENDA ITEM SUMMARY DATE: March 1, Zoos FORT COLLINS CITY COUNCIL STAFF: John Armstrong Kathy Valdez SUBJECT U Y First Reading of Ordinance No. 034,2005,Authorizing the Lease of City-Owned Property at 3829 East Prospect Road, Fort Collins, Colorado, to Frontline Bioenergy. RECOMMENDATION Staff recommends adoption of the Ordinance on First Reading. The Natural Resources Advisory Board reviewed Frontline BioEnergy's request at its meeting of February 2, 2005, and the Board unanimously recommends that Council adopt the Ordinance. FINANCIAL IMPACT i Frontline Bioenergy has obtain!! a gr t fRr resarcranddeve pment,and the City of Fort Collins Utilities, in support of its resea , ill pay the armase i e amount of$20,337.for the first year, $20,947 for the second year and $21,575 for the third year for leasing the above-mentioned shop/office area, an area for a temporary shelter, and parking. If Frontline requests to lease additional space in the optional lease areas described in the lease, it will pay the City for the leasing of that additional area at a rate of$200 per hundred square feet. EXECUTIVE SUMMARY Vacant buildings suitable for industrial uses are located on the Resource Recovery Farm property (RRF), which was transferred from Utilities to the Natural Areas program for use as open space in 2003. Frontline BioEnergy, which is working to develop innovative technology and integrate systems that convert biological waste materials (biomass) into useful energy products such as hydrogen through thermal or mi obiol(pr es,P ' ed inrsing certain of the buildings at RRF. Frontline BioEnergy offe, provenearc ,d and manufacturing expertise,and system integration. In furtherae of thty C pte olicy of encouraging development of and implementing hydrogen- elated' ects`inolli nd funds have been budgeted for Utilities' use for hydrogen fuels projects. Utilities has proposed to use a portion of those funds to assist Frontline BioEnergy in acquiring this lease space from the Natural Areas program for the start- up of its operations. The lease would include the following: both levels of the office,consisting of 2,106.88 square feet, 2,450.09 square foot section of the shop, and an outside area on which the tenant would construct a temporary open front pole shed, together with a small amount of parking area. March 1, 2005 -2. Item No. 17 BACKGROUND The RRF was acquired by the ural oinvpifaciilitiekormerly nhp 2 3,following direction from City Council to preserve the prope as opd, a d community separator. The RRF consists of several residential ctut used as part of the City wastewater treatment process;and surrounding agricultural land. Currently,none of these facilities are in use. Frontline is proposing to use a portion of the RRF to conduct pioneering research in the conversion of biomass (specifically chipped tree branches from the City Forestry Program) to hydrogen. Frontline will use a gasifier(also referred to as an anaerobic digester)to decompose the wood chips, resulting in a gas that includes hydrogen. Frontline also has developed proprietary approaches and configurations and are pursuing licensing agreements to obtain further intellectual property in the following areas: • Proprietary configuration for biomass gasification which promises significant reduction in production cost of hydrogen; • Proprietary meth ds of to if du)tn bi a a ification,lowering system cost; .> A4 _ • Proprietary reactor design for lower cost natural gas processing; and • System integration technology and technology licensing that will dramatically reduce costs in new anaerobic digesters while improving the efficiency of existing anaerobic digesters. Biomass is a"renewable fuel"meaning that it is a sustainable resource whose energy is derived from the sun (photosynthesis). The technology has the potential to convert other types of biomass to usable energy,including other plant materials that are either agricultural waste products(nut shells, rice hulls,grape stakes, orchard prunings,wheat straw and corn stover); urban residues (urban tree pruning waste, grass clippings, pallets, construction wood waste, and municipal refuse); energy crops that are grown specifically for use in an energy application(rapid growing poplar,aspen,and miscanthus); or a variety of wet organic materials found in municipal waste water, confined animal production,animal rendering plan , w le and e a I pr,ts. he lease specifies that Frontline will have the option to lease ad tional s ce ink e o d cq�rosting buildings should the need arise within the lease period. p The City will receive numerous benefits from its support of this project. The lease stipulates that the City will be a preferred consumer of hydrogen resulting from the project, should usable supplies be produced. Frontline will support efforts to educate the public about biofuels research and usage. Should full production of hydrogen occur,the project has the potential to positively affect the City's solid waste diversion rate by providing an additional option to landfilling yard waste (and other organics). Finally, the project has the potential to establish Fort Collins as a leader in hydrogen research and production.