By my math, 40 kW can supply 100 amps @ 230V, 3-phase. Perhaps the other electrician took a look at his clamp-on ammeter, saw 100 amps, and did a quick calculation based on that?
I can't think of any situation where the Code allows you just take a quick reading and use that in your load calculations. The closest would be 220.87 (which I'm doubtful even applies to your situation), and even then you have to use 125% of the peak demand obtained from a minimum 30 day continuous load test.
That's not even mentioning the fact that just because a generator can handle the running current, doesn't mean it can handle the starting current. You seem to know the right way to go about sizing the installation; now you have to figure out how to explain it to the City's representative so that he or she will understand. Unfortunately, that's usually the hard part, especially if there's another guy whispering in their ear that you only want a bigger generator so you can gouge the city for a bigger profit. My advice is to try to get a one-on-one, face-to-face meeting, and then take things slow to make sure they understand your explanation. If they won't believe you, you can always politely invite them to give you a call when the 40 kW generator stalls and dies when they try to use it to start their well pump.
One final thing to consider is the generator's warranty. I haven't looked too carefully at the warranty conditions, but I'm pretty sure you can void the warranty by connecting too large of a load to the generator (that includes a motor with too high of a locked-rotor current). In other words, if Generac says 150 kW is too small but you think it will still work okay, you may be voiding the warranty if you use it. Just one more thing to consider.