Council authorizes appraisal step in electric utility feasibility study; NewGen contract amended by $100,000

The Clearwater City Council voted unanimously on Oct. 15 to amend the city’s contract with NewGen Advisors to move the electric utility feasibility study toward a formal system appraisal. The council authorized increasing the contract ceiling by $100,000 — funded from unencumbered special program revenues — to obtain income, market and fair‑market valuation approaches to the city’s electrical distribution assets.

City Attorney David Margolis (who presented the item) summarized NewGen’s feasibility findings and the key uncertainty: NewGen estimated the total acquisition cost at about $572 million, of which roughly $371 million represents the hard asset acquisition (poles, wires, transformers, etc.). Margolis emphasized that the $371 million estimate for hard assets carries material uncertainty — NewGen and staff cited a wide possible range depending on appraisal approach and assumptions. He said a formal appraisal would provide multiple valuation approaches (income, market and fair market) and produce a more defensible basis for any later negotiation or appraisal comparison with Duke Energy’s estimates.

Margolis said the city has already received Duke’s Concentric estimate and that appraisals would help narrow differences before engaging Duke in negotiations or forming any purchase offer. The proposed contract amendment revises the existing NewGen not‑to‑exceed from $504,000 to $604,000; Margolis said the feasibility work under the original contract came in under budget, leaving credit that can be applied toward the appraisal. He told the council the $100,000 amendment would not affect millage, utility rates, or the operating budget because funding comes from unencumbered special program revenue.

Council discussion focused on the appraisal’s scope, the different valuation methodologies, and the potential litigation/eminent‑domain path should negotiations fail. Several council members emphasized taking “baby steps” and retaining off‑ramps: approving the appraisal is a discrete step that does not commit the city to a purchase offer or litigation. Council member Ollman asked whether NewGen would provide income‑approach, market‑approach, and fair‑market valuations; Margolis confirmed that multiple approaches would be provided to increase transparency.

After taking public comment, the council authorized the contract amendment and directed staff to return with appraisal results and recommendations before any further commitments.

Ending

The appraisal is intended to give the city an independent, methodologically transparent valuation of distribution assets before any formal negotiation with Duke Energy or pursuit of other legal options. Council members said they expect subsequent off‑ramps after appraisal results allow an informed decision.