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Silver Bay Renewable Energy

Silver Bay Renewable Energy. A new, publicly owned utility service for the generation, production and distribution of renewable, sustainable heat and power for the citizens and businesses of Silver Bay. AGENDA. Welcome and Introductions How did we get here?

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Silver Bay Renewable Energy

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  1. Silver Bay Renewable Energy A new, publicly owned utility service for the generation, production and distribution of renewable, sustainable heat and power for the citizens and businesses of Silver Bay.

  2. AGENDA Welcome and Introductions How did we get here? Understanding the Eco-Industrial Park Concept and Clusters Silver Bay Renewable Energy – the new public utility May 10, 2011 Election – What are you voting for? Questions/Comments

  3. WELCOME AND INTRODUCTIONS City Council – Mayor Scott Johnson, Councilors Joanne Johnson, Steve Marolt, Dave Gustafson, and Carlene Perfetto EDA – President Wade LeBlanc, Lloyd Houle, Scott Bauck, Joanne Johnson and Steve Marolt City Administrator – Lana Fralich Project Coordinator – Bruce Carman Engineer (CHP/Pellet Facility) – Chuck Hartley with LHB BioEnergy/Food Greenhouse Facility – Dave Abazs – Round River Energy, Dr. Mike Mageau, FREE Renewable Energy and UMD Financial Specialist– Rusty Fifield, Northland Securities

  4. How did we get here? Economic Development Authority did a general SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats). The key findings were in areas of the Environment, Transportation, Job Creation/Retention, Economics, Education, and Green/Renewable Energy Funding

  5. Job Creation/Retention: First importance was creating new livable wage jobs, retaining existing jobs (such as the logging industry), and diversifying our employment base. Environment – we recognized that development can be more difficult in this area due to the Lake, the Forestry, and the natural habitat; therefore, we knew that the MPCA, EPA, and DNR/Forestry Groups would need to be involved immediately. Transportation – we have recognized that SB and the North Shore typically can pay more for transportation costs because we primarily import goods and have a minimal amount of exported goods. We wanted to identify opportunities that would develop something that would be primarily for local consumption, but have an exported value also.

  6. Economics – we recognized that we are facing tough economic times where private industry may not be willing to invest in the initial “feasibility” of something new in this area. We thought if there was a way to find funding to help do the pre-development of a business, it would more likely entice the private investor . Education – we recognized that no matter what is developed, it should enhance our school system and potentially develop a post-secondary interest, workforce training interest, or a collaboration of all education sectors. “Green” / “Renewable Energy” – we recognized that times are changing and what discussion was taking place for the future? We understood that private industries were facing regulatory changes and that financing options were heavily weighing towards this sector. How could we tap into these funds? What is “Green”? What do we have here?

  7. Let the Work BeginIn October 2008, an inter-disciplinary Project Team of local stakeholders and regional renewable energy experts began discussing the possibility of transforming the Silver Bay Business Park into an Eco-Industrial Business Park using the concept of Eco-Industrial Development.

  8. Silver Bay Eco-Industrial Business ParkProject Management Team • City of Silver Bay Representatives/Stakeholders • Scott Johnson-Mayor • Lana Fralich-City Administrator • Wade LeBlanc-Silver Bay EDA President • GussKrake-Retired Engineers Technical Assistance Program/Silver Bay Resident • Bruce Carman, Cedar Tree Enterprises, Inc., SBEIBP Project Coordinator • Chuck Hartley, LHB Engineering-Director of Energy Management Services • Dr. Mike Mageau, Center for Sustainable Community Development • Bill Mittlefeldt, NE Clean Energy Resource Teams Coordinator • Tim Nolan, MPCA - Sustainable Development Strategic Initiatives • Joe Nicklay, Silver Bay K12 Principal • Gwen Carman, Cook County K12 Principal • Rich Sill, North Shore Trade and Tech Project, Coordinator • Kim Skyelander, Wolf Ridge Environmental Learning Center, Director • Dave Abazs, Round River Farms & Wolf Ridge Environmental Learning Center • Paul Sandstrom, Laurentian R C & D Coordinator, USDA • Don Peterson, Woody Biomass Consultant, USFS • Mike Polzin-Minnesota Power Representative • North Shore Mining/Cliffs Natural Resources, Inc. • Mike Mliner-General Manager • Scott Gischia/Jenny Ramsdell - Environmental Services

  9. Funding Sources MPCA DNR – Lake Superior Coastal Program IRRRB Legislative Lobbying Efforts – Taconite Production Tax EPA MN and US Office of Energy Securities US Dept. of Agriculture MN Dept. of Employment and Economic Development LCCMR UMD and MN Extension Superior RAC Local Donations

  10. Sustainable Eco-Industrial Development • A Minnesota Pollution Control Agency grant for "Sustainable Industrial Development" was applied for and received in June 2009. • The MPCA Grant assessed two questions with the ultimate goal being the creation of “sustainable, living wage jobs” for community of Silver Bay.

  11. MPCA Grant – 2 Questions 1. Can the proposed Eco-Park be self-sustainable (off the grid) using sustainable, renewable energy to generate the heat and power required for complete park build out? The forms of renewable energy: wind, biomass / binary (CHP) and biodiesel. 2. Using the concepts of industrial ecology and industrial clustering can Eco-Industrial Development provide a means for continuing the development of the existing park?

  12. What is Eco-Industrial Development and Why do it ? • Eco-Industrial Development is based on designing and integrating sustainable industrial systems. In an industrial system, the consumption of energy, natural resources and materials is optimized, waste generation is minimized and the waste from one process serves as the feedstock for another. (Frosch and Gallopoulas, Strategies for manufacturing, Scientific American, 1989) • Businesses will be attracted to locate within the park through the availability of renewable, sustainable heat and power. Businesses will increase their profitability from predictable and reliable energy costs. • Business profitability will be enhanced through synergistic relationships that will reduce the costs associated with feedstock acquisition and waste / by-product disposal.

  13. Mission Statement:To network businesses to work with each otherand the Silver Bay Community in order to createand diversify living wage employment by improving resource productivity, eliminating pollution and expanding marketsthrough renewable, sustainable energy development.

  14. Silver Bay Renewable Energy • A new, publicly owned utility service for the generation, production and distribution of renewable, sustainable heat and power for the citizens and businesses of Silver Bay.

  15. Renewable, Sustainable Energy Generation 3 Forms of Energy Generation • Biomass / Binary • Wind / Solar • Biodiesel though Algal Growth

  16. Energy Cluster – First Priority • Biomass / Binary aka Combined Heat and Power or CHP • Feedstock readily available. • Immediate impact on local sustainable job creation. • Technology available and accepted. • Quickest energy source to get up and running. • Compatible and synergistic industry available.

  17. CHP Facility

  18. Dept. of Energy (DOE) predicts energy prices to rise…

  19. Minnesota has 15 million acres of cost effective and clean woody biomass 2005 (OSB peak) harvest level at 3.73 million cords, current harvest is estimated at 2.7 million cords.

  20. Local Benefits of Biomass Studies show that 95% of Fossil Fuel dollars leave the community, while 75% or more of biomass dollars stay in the community. Minnesota schools using pellets include Blackduck, Northome, Goodridge, Birch Grove and 2 St Louis County Schools (ISD 2142, IRRRB Grant) Potentially Ely and Grand Marais District Heat French River, Hatchery

  21. Biomass Binary (Organic Rankine Cycle) Power Wood combustion heats a thermal oil to 600°F Hot thermal oil vaporizes an organic fluid (silicon oil) which spins a turbine & generates electricity Turbine cooling water is heated to 175°F, suitable for district heat and drying pellet feedstock

  22. Power from biomass is expected to grow dramatically

  23. CHP & Pellet Production Synergy • Related Industries and Feedstocks. • Sustainable Job Creation. • Local Economic and Environmental Benefits. • Pellet Production uses 1.6MW of the 2.5MW. • Zero Waste – Zero Emissions.

  24. CHP / Pellet Production Sustainable Job Creation. • CHP Facility: 5 • Pellet Facility: 25 • Logging: 60 • Distribution: ? • Total: 90-? • Current Status: Business Plan, Permitting, and Financial Packaging

  25. Biofuel – Food Cluster • Food – Biofuel Greenhouse No.1 Aquaculture – Hydroponics – Algal Growth (Closed Loop System) Renewable Energy Components: Wind Biomass Solar Hot Water Algae Growth – Biodiesel Additionally: Rain Capture System

  26. Wind Turbine • Located East of the HigherWater Tower • Fully Funded – No Expense to Silver Bay • Revenue source for the Greenhouse and Eco-Park Available Now. • Need to develop a Power Purchase Agreement with Minnesota Power.

  27. Silver Bay Renewable Energy • Renewable & Sustainable Energy – All Forms • Locally Owned • Silver Bay EDA owns 51% • Business, Land Owners and Stakeholders 49% • “Silver Bay Eco-Park Renewable Energy, LLC” • PPA with local Utility • Revenue source to maintain the Eco-Park

  28. Future Benefits to the Silver Bay Community • Economically • Sustainable Job Creation, Growth and Stability • Increasing Tax Base / Revenue Source • Renewable, Sustainable and Stable Energy Costs • Future Expansion Into the City • Health • Reductions in Pollution • Locally Grown Food Supply: Healthier, Less Costly, Sustainable and Safe. • Socially • Environmental Stewards / Sustainable Forestry • Community Sustainability / Future Home for Our Children • Build on and Expand the Existing Community Pride.

  29. MAY 10, 2011 SPECIAL ELECTION - BALLOT QUESTIONS City Question #1: Should the City of Silver Bay develop, construct, and operate a new public utility service for the generation, production, and distribution of heat and electrical power for its citizens and businesses at an estimated cost of $15 million? City Question #2: Should the City of Silver Bay be allowed to issue bonds or incur debt to raise money for the development, construction, and operation of a new public utility service for the generation, production, and distribution of heat and electrical power for its citizens and businesses at an estimated cost of $15 million? By voting “yes” to this question you are voting for a property tax increase.

  30. Ballot Comments The estimated cost is $15 million, which is primarily for the CHP facility. Where will this money come from? Grants, Private Investments, and/or Bond Issuances. Northland Securities has been hired to help review financial impacts for the City. What will it cost me? We do not expect it to cost taxpayers anything. The new public utility will be run as an “enterprise” fund where operation costs and any debt would be repaid through the revenues generated by the new utility. It would be similar to the Water/Sewer and Liquor Store. Public Energy/Electric Utilities are common and we are working with an advisor who developed/managed a similar facility for many years to insure realistic operations.

  31. If it won’t cost me anything why does the question say it will increase my property tax? It is our understanding, by law the ballot question must state this primarily due to the city incurring debt for the development of a new utility. In order for the City to receive the best financial package to support any type of development, the City would secure the debt with General Obligation Bonds. Should the City have some unforeseen issue to repay the debt, then the City could levy a property tax to pay the bond. Again, we do not expect this to happen; we just see this as a “worst case” scenario. So how much would my property taxes increase?

  32. Avg. Annual Tax Rate 6.39% 31.94% 63.9% 99.98% Amount of Bond Issuance/Debt $1 MIL $5 MIL $10 MIL $15 MIL TYPE OF PROPERTY EST. MV TAX CAPCITY Residential (Hmstd) $ 50,000 $ 500 $ 31.97 $159.69 $ 319.52 $ 499.90 $ 75,000 $ 750 $ 47.96 $239.53 $ 479.28 $ 749.85 $ 100,000 $1,000 $ 63.94 $319.38 $ 639.04 $ 999.80 $ 150,000 $1,500 $ 95.92 $479.07 $ 958.55 $ 1,499.70 $ 200,000 $2,000 $127.89 $638.76 $ 1,278.07 $ 1,999.60 Residential (Non-Hmstd) $ 50,000 $ 625 $ 39.97 $ 199.61 $ 399.40 $ 624.87 $ 100,000 $1,250 $ 79.93 $ 399.22 $ 798.79 $ 1,249.75 $ 250,000 $3,125 $199.83 $ 998.06 $ 1,996.99 $ 3,124.37 $ 500,000 $6,250 $399.65 $1,996.11 $ 3,993.97 $ 6,248.74 Commercial/Industrial $ 50,000 $ 750 $ 47.96 $ 239.53 $ 479.28 $ 749.85 $ 100,000 $ 1,500 $ 95.92 $ 479.07 $ 958.55 $ 1,499.70 $ 250,000 $ 4,250 $ 271.76 $1,357.36 $ 2,715.90 $ 4,249.14 $ 500,000 $ 9,250 $ 591.49 $2,954.25 $ 5,911.08 $ 9,248.13 $1,000,000 $19,250 $1,230.93 $6,148.03 $12,301.44 $19,246.11 Seasonal Residential/ $ 50,000 $ 500 $ 31.97 $ 159.69 $ 319.52 $ 499.90 Recreational $ 100,000 $ 1,000 $ 63.94 $ 319.38 $ 639.04 $ 999.80 $ 250,000 $ 2,500 $ 159.86 $ 798.45 $1,597.59 $ 2,499.50 $ 500,000 $ 5,000 $ 319.72 $1,596.89 $3,195.18 $ 4,998.99 $1,000,000 $11,250 $ 719.38 $3,593.00 $7,189.15 $11,247.73

  33. What happens if the top question passes, but the second question does not? The first question must pass with a 5/8 (62.5%) vote for yes of the votes casted. The second question must pass with a simple majority. If the first question, passes but the second one doesn’t, this means that the city is authorized to develop a municipal utility, but we then would have to find funding that would not result in debt. If neither question passes will that eliminate the projects in the park (Pellet Facility and BioEnergy/Greenhouse Facility)? We do not expect these projects to end; however, it may not make the projects as enticing to the private investor because the energy costs may not be as economical as if the city owned the utility.

  34. So Why Vote Now? Wind Turbine – The City has the funds to erect the turbine and would be able to begin executing a power purchase agreement w/ a local utility company. There is no debt expected to be incurred for this project. The electricity would go to the grid and the revenues generated would offset the electrical expense purchased for the Biofuel/Greenhouse #1. CHP Facility – The City would not develop the $15 million Combined Heat and Power (CHP) plant until a company (such as the Pellet Facility) would be constructed privately or until the majority of the heat/electricity would be consumed within the park. The vote would direct the role the city will take on the development.

  35. WHAT DO YOU NEED TO HELP MAKE YOUR DECISION? We want you to understand what you are voting for – In favor of or against. Please do not hesitate to ask your question. Questions/Comments? Complete the Question/Comment form Send an email with your question to sbay@silverbay.com Call city hall at 218-226-4408 Information will be updated on: www.silverbay.com

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