MINUTES - Executive - 7/12/2007 CITY OF SALEM
J U LY 12, 2007
EXECUTIVE SESSION
A Regular Meeting of the City Council was held in the Council Chamber on Thursday,
July 12, 2007 at 7.00 P.M. for the purpose of transacting any and all business, at which
time, the City Council, by recorded roll call vote, went into Executive Session with Mayor
Driscoll, to discuss an update on the status of discussions with Dominion regarding the
power plant tax agreement. Notice of this meeting was posted on July 5, 2007 at 5.54
P.M.
Councillor Prevey moved that the City Council adjourn to the Council Anteroom
to hold an Executive Session, and at the end of the Executive Session, the regular
meeting will continue. Adopted by unanimous roll call vote of 10 yeas, 0 nays, 1 absent.
Councillor Sargent recused himself from the meeting and was recorded as
absent.
Present in the anteroom were Mayor Kimberley Driscoll, Frank Kulik, Assessor,
Glen Walker from the appraisal firm and Richard Viscay, Finance Director.
Council President Matthew Veno presided.
Councillor Veno turned the meeting over to the Mayor to give the status of the
negotiations with Dominion regarding a tax agreement.
Mayor Driscoll stated that the tax agreement with Dominion expired on June 30tn
2007. The city attained Attorney McLaughlin to assist in the talks with Dominion. These
talks started three (3) months ago. Dominion was under threat for environmental
regulations 8.7 million. Hopefully that we would need experts. We need to understand
the value of the facility. Dominion never thought it would be open past the year 2007.
It's running at a profit. Governor put us back in REGGI laws and regulations. As of late
we have had marathon sessions with Dominion and we are far apart on the value.
We're dealing with a Virginia crowd. Very far apart on realizing the value. We'll send
Dominion estitimates. Once tax rate is set we will need to make a decision on value of
the facility. We are fortunate to have Glen Walker on board. We're trying to bring in as
much revenue as possible. We have money from state. They would be willing to sell
property to the city.
Glenn Walker—We specialize in appraisals and assist cities in negotiations. The
agreement expired the end of June. You have a coal fired facility built in 1960 with 1960
technology. Base load unit it's oil fired only 5% of the time. Tow distinct base lines.
Environmental issues dealt with in last PILOT agreement. They didn't think it would still
be open. Five million dollars has been spent on Environmental issues. They need to
decide if they will keep the plant open and spend more on Environmental issues (2010).
The company that owns the plant says the plant will close. But they said that before and
are still open. We're dealing with corporate, which wants to drop the taxes, 225 million
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assessment bought at 40 million were now at the middle of this range. We value the
facility at 225 million and they don't want to accept the 225 million value. How many
more years will the plant operate.
Councillor Veno- Governor put REGGI in place there is an uncertainty of
statutory requirements.
Glen Walker— stated there is no way to know what REGGI will have as impact.
The REGGI legislation was based on old plant technology. Under the current Governors
proposal they are opening it up to others to run the plant or run up cost. Since the last
PILOT agreement Dominion has implemented pollution control and the state allowed to
exempt 100% of plant was taxable now because of the exemption 85% is taxable.
Councillor Corchado —Asked so this can be done without any input from the
City?
Glenn Walker— stated yes, the department grants exemptions. You get notified
when exemptions will be put into place.
Mayor Driscoll — stated that they never mention anything about exemptions they
filled last minute for FY08.
Councillor O'Keefe - asked isn't it a 700 mega watt plant?
Glenn Walker—yes, they have 4 industrial boilers (700 mega watts)
400 mega watts by the chimney unit# 4, unit#3 is 150 mega watts coal, unit #1 & 2 are
70/75 mega watts.
Councillor O'Keefe stated that he thought the ISO was involved.
Glenn Walker— stated without getting into a price on electricity REGGI closes the
gap. Additional environmental costs level the playing field. North Star National Grid is
working to get new grids. Some lines are displacing plants.
Mayor Driscoll stated the DEP is firmly in the middle, some want the plant to
close but it's still very profitable. We are focused on a short term agreement instead of 8
years we are looking more at 1 or 3 year.
Glenn Walker— stated he doesn't like agreements to go to long because of the
uncertainties.
Councillor Pelletier— asked what the Governor and state Representatives take
on this?
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Mayor Driscoll stated that the Representative and Congressman want to keep
the plant open. The Governor has two mind sets on this.
Councillor Pelletier asked if this is just an update?
Mayor Driscoll stated yes it's an uphill battle for an agreement. It's not fair for the
residents the their tax bill has gone up 50%, while the plants tax bill has gone down.
We're looking for them to pay their fair share. This discussion is to be kept in this room.
Councillor Pelletier thanked the Mayor for taking a stance.
Mayor Driscoll asked for Councillors input.
Glenn Walker— stated that they are finding a way to make this plant work.
Councillor Sosnowksi — stated for the plant to compy it will cost 300 million with
the environmental concerns. What would the cost be to reequip it?
Glenn Walker—they need a simple cycle burner 12,000 BTM per kilowatt hour
gas would lower efficiency. A couple of million to combine 1,000 per kilowatt would be
700 million.
Councillor Sosnowski - asked if economics makes them sell would it be
worthwhile for the City to own the plant?
Glenn Walker stated he is not a fan of municipalities owning fossil fuel plant. But
owning one for municipal ownership of plants would not be profitable, but you would
need to own multiple plants.
Councillor Corchado — asked what the assessed value of Blaney Street?
Assessor Kulik - responded 2 '/2 million.
Councillor O'Keefe asked if we are tuned up? And asked the Mayor have you
talked with the deligation?
Mayor Driscoll - responded that the Legislature is split.
Councillor Veno — stated REGGI is the market for those credits.
Councillor Corchado — said this could happen fast.
Mayor Driscoll - stated by the fall.
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Councillor Prevey asked is there something going on with REGGI which could
impact this before the fall?
Mayor Driscoll responded this could have an impact on cost.
Councillor Pelletier noted that this impacts Union negotiations for Teachers,
Police and AFSCME.
On the motion of Councillor Pelletier to adjourn the Executive Session and the
regular meeting continue was adopted by a roll call vote of 10 yeas, 0 nays, 1 absent.
Councillors Sosnowski, Prevey, O'Leary, O'Keefe, Lovely, Furey, Corchado, Blair and
Veno were recorded as voting in the affirmative. Councillor Sargent was recorded as
absent. The Executive Session adjourned at 9.55 P.M.
ATTEST: CHERYL A. LAPOINTE
CITY CLERK