Memorandum 14-022 Authorization to Replace Boilers at Airport Terminal

Memorandum 14-022

TO:                      Walt Wrede – City Manager

FROM:                Carey Meyer – Public Works Director

DATE:                 January 22, 2014

SUBJECT:         Authorization to Replace Boilers – Airport Terminal

The Airport Terminal is in the process of being converted to natural gas. The boilers that exist at the terminal are over 20 years old. Replacing these boilers at the same time that the burners are being replaced will increase substantially the efficiency of the heating system and reduce maintenance costs. The existing boilers that are reaching the end of their useful life would be replaced.

Replacement of both boilers and burners will cost $54,173. The Council has already authorized spending $20,084 to replace only the burners. An additional $34,089 would be needed to implement a complete conversion.

The old boilers operate at 50% efficiency. New boilers will operate at 97% efficiency.

If both the boilers and the burners are replaced:

               Current average annual fuel cost to heat Terminal                $32,000

               Proposed average annual fuel cost (complete conversion) $  5,000

               Annual cost savings                                                                               $27,000

               Benefit /Cost = $54,173/$27,000 = .49              (payback in 2 years)

The current balance in the Airport Reserve Fund is $73,000.                                          

Recommendation:

The City Council pass an ordinance amending the 2014 Operating Budget by appropriating $34,089 from the Airport Reserve Fund for the replacement of the boilers at the Airport Terminal and authorizing the City manager to execute all appropriate documents.