HomeMy WebLinkAboutBackground ReportAttachment 1
BACKGROUND REPORT
Staff seeks direction from City Council regarding implementation of sustainability
improvements for City facilities. The approximately $1.5 million in capital
improvements proposed for municipal facilities as part of the proposed 2014-
2015 FY budget presents an opportunity to undertake additional sustainable
improvements in the areas of energy effic envy renewable energy, and ,�..�t_
energy Ir and vruL�..7
efficiency. Such efforts are intended to reduce natural resource consumption and
emissions from municipal facilities. These efforts are consistent with measures
contained in the Climate Action Plan (CAP) adopted by City Council as part of
the Comprehensive Land Use Update (General Plan Update) in 2012 and the
Energy Roadmap prepared in 2013. Pursuing these sustainability improvements
coincident with planned capital improvements is expected to result in
considerable cost savings.
Financing
The capital required for these improvements can be financed and paid back out
of future utility bill savings as energy and water measures will be designed to
generate future utility bill savings. Precise figures for the total costs and projected
savings will be determined in the design phase of this effort.
Several financing options exist. Regardless of which are ultimately used, staff
recommends taking advantage of all existing rebate and incentive programs
where practical. To pay remaining upfront capital costs, past sources such as
CEC loans, EECBG funds, and QECBG are no longer available. Current
financing alternatives are limited to:
1. Direct budgetary allocation with CIP funds. The size of this expenditure makes
this option infeasible.
2. Tax-exempt municipal lease. Costs of funds are near historic lows (-3%). City
responsible for design costs. City is at risk if savings do not materialize.
3. Tax-exempt municipal lease with performance based contract (energy services
contract). Costs of funds are near historic loltws (-3%). Design costs paid by third -
party. Minimum savings is guaranteed.
4. Off -Credit financing. Does not affect the balance sheet of the City as it is not a
form of debt. Underlying interest rate is slightly higher than a tax-exempt
municipal lease. Energy savings risk is shared by City with a third -party.
Implementation
There are a few options for contracting and procuring the services needed to
design and install the sustainability measures:
1. Multi -stage Design -Build RFP process. This process would follow traditional
procurement procedures, and identify a firm to undertake design of the
sustainability improvements, and upon the City's approval, execute the
project. This process will be lengthy and require staff resources accordingly.
Under this approach, planned capital improvements wArnu iiri either need to be
delayed, or The sustainability improvements would need to be undertaken at a
later time, and at greater cost.
2. Utilize CA Government Code 4217 (CA 4217) to expedite procurement. CA
4217 authorizes a municipality to enter into a design, construction and
financing contract (energy services contract) for energy improvements to
public facilities, without an RFP process, if it is determined by City Council to
be in the best interest of the City. Under CA 4217 a municipality may request
proposals from a pool of qualified energy service companies established
pursuant to Section 388 of the Public Utilities Code.
In order to implement these efforts simultaneously with needed capital
improvements, and begin realizing anticipated savings as soon as possible, staff
recommends selecting an energy services contractor under CA Code 4217
through an expedited solicitation process.