HomeMy WebLinkAboutR-11261 making findings on energy savings and determining other matters in connection with Energy Efficiency RetrofitsR 11261
RESOLUTION NO. 11261 (2021 SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, MAKING FINDINGS ON ENERGY SAVINGS
AND DETERMINING OTHER MATTERS IN CONNECTION WITH
ENERGY EFFICIENCY RETROFITS
WHEREAS, it is the policy of the State of California and the intent of the State
Legislature to promote all feasible means of energy conservation and all feasible uses of
alternative energy supply sources; and
WHEREAS, the City of San Luis Obispo (“City”) desires to reduce energy costs at
its facilities; and
WHEREAS, the City proposes to enter into an On-Bill Financing Agreement (“OBF
Agreement”) and related contract documents with PG&E (“Utility”), who in turn will use
Electricraft Inc. (“Contractor”) as the Contractor for facilities at the City’s real property
sites, pursuant to which Contractor will remove old lighting fixtures and install new LED
lighting in the City’s facilities; and
WHERAS, through the Utility On-Bill Financing Program the City will have
$7,590.07 capital outlay and will continue to pay their utility bills through the loan’s
existence; and
WHEREAS, Contractor has provided the City with analysis showing the financial
and other benefits of entering into the OBF Agreement, which analysis is attached here
to as Exhibit A and made part hereof by this reference; and
WHEREAS, Exhibit A includes data showing that the anticipated cost to the City
for the electrical energy saved by the LED upgrades will be equal to/or less than the
anticipated cost of the project thus making these projects bill neutral; and
WHEREAS, Contractor was the selected vendor for the On-Bill Financing project
due to their low bid and Contractor’s carrying the costs and structuring of the project to
have minimal capital outlay to the City; and
WHEREAS, the City proposes to enter into the On-Bill Financing Agreements and
related contract documents in substantially the form presented at this meeting, subject to
such changes, insertions or omissions as the City Manager and City Attorney reasonably
deems necessary following the Council’s adoption of this Res olution; and
WHEREAS, pursuant to Government Code section 4217.12, this Council held a
public hearing, public notice of which was given two weeks in advance, to receive public
comment.
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Resolution No. 11261 (2021 Series) Page 2
R 11261
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis
Obispo that:
SECTION 1. The terms of the OBF Agreement and related agreements are in the
best interests of the City.
SECTION 2. In accordance with Government Code section 4217.12, and based
on data provided by Exhibit A, the Council finds that the anticipated cost to the City for
lighting retrofits provided by the OBF Agreements will be less than or equal to the
anticipated cost to the City of electrical energy that would have been consumed by the
City in the absence of the OBF Agreements.
SECTION 3. The City Manager and City Attorney are hereby authorized and
directed to negotiate any further changes, insertions and omissions to the OBF
Agreement as they reasonably deem necessary, and thereafter to execute and deliver
the OBF Agreement following the Council’s adoption of this Resolution. The City Manager
is further authorized and directed to execute and deliver any and all papers, instruments,
opinions, certificates, affidavits and other documents and to do or cause to be done any
and all other acts and things necessary or proper for carrying out this Resolution and said
Agreements.
SECTION 4. Environmental Review. The City Council hereby determines that the
execution of an OBF Agreement with Utility are statutorily and categorically exempt from
environmental review on the basis that the projects are: installation of LED upgrades in
and on existing facilities or at existing parking lots (Public Resources Code § 21080.35;
new construction or conversion of small structures (CEQA Guidelines § 15303); minor
alterations to land (CEQA Guidelines § 15304); projects which consist of the construction
or placement of minor accessory structures to existing facilities (CEQA Guideline s §
15311); and activities which can be seen with seen with certainty that there is no
possibility that the activity in question may have a significant effect on the environment
(CEQA Guidelines § 15061(b)(3)).
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Resolution No. 11261 (2021 Series) Page 3
R 11261
SECTION 5. City staff are hereby authorized to file and process a Notice of CEQA
Exemption for the project in accordance with CEQA and the State CEQA Guidelines, and
the findings set forth in this Resolution.
Upon motion of Council Member Pease, seconded by Council Member
Christianson, and on the following roll call vote:
AYES: Council Member Christianson, Marx, Pease, Vice Mayor Stewart,
and Mayor Harmon
NOES: None
ABSENT: None
The foregoing resolution was adopted this 6th day of July 2021.
___________________________
Mayor Heidi Harmon
ATTEST:
______________________________
Teresa Purrington
City Clerk
APPROVED AS TO FORM:
_______________________________
J. Christine Dietrick
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the
City of San Luis Obispo, California, on ______________________.
___________________________
Teresa Purrington
City Clerk
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7/12/2021 | 12:18 PM PDT
City of SLO City Hall and Fire Station
#1 Joint Project Proposal
The City of San Luis Obispo enrolled in CC-LEAP in 2020 to take advantage of the no-cost
project management services available to help the agency move energy efficiency projects
from conception to completion. CC-LEAP performed an audit of City Hall and Fire Station #1
on December 11, 2020. This project proposal summarizes recommendations of the lighting
audit conducted by Enpowered on the aforementioned date.
Benefits of this project include improving safety and reliability, reducing maintenance costs, hedging against increasing
utility costs, and reducing greenhouse gas emissions by 57.74 metric tons annually.
Project Scope
Facility Energy Efficiency Measure Fixture
Qty
Est. Annual
kWh Savings
Est. Annual
Cost Savings*
Electricraft Gross
Project Cost Quote
Lee Wilson Electric Gross
Project Cost Quote
City Hall Interior LED Lighting Retrofits 260 41,435 $10,070 $106,171 $108,986
Fire Station #1 Interior LED Lighting Retrofits 217 40,231 $ 9,567 $88,949 $74,374
Total 477 81,666 $19,637 $195,120 $183,360
* Estimated Cost Savings ($/yr) is calculated using the PG&E’s blended utility rate of $0.24/kWh
Project Financials
The table below presents two different contractors’quotes, one quote from Lee Wilson Electric and another quote from
Electricraft, to compare financial metrics.
Electricraft’s Quote Lee Wilson Electric’s Quote
Gross Project Cost
City Hall: $106,171
Fire Station: $88,949
Total:$195,120
City Hall: $108,986
Fire Station: $74,374
Total:$183,360
Approved PG&E’s On-Bill Financing (OBF)
City Hall: $98,580.93
Fire Station: $90,335.66
Total: $188,916.59
Approved Project Buy-Down Amount
City Hall: $15,745.30
Fire Station: $0
Total: $15,745.30
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Estimated Revised PG&E OBF Amount*City Hall: $99,864
Fire Station: $88,949
Total: $188,813
City Hall: $99,864
Fire Station: $74,374
Total: $174,238
Estimated Revised Buy-Down Amount*
City Hall: $7,590.07
Fire Station: $0
Total:$7,590.07
City Hall: $10,405.07
Fire Station: $0
Total:$10,405.07
Estimated Annual Cost Savings**$19,637 $19,637
Simple Payback Period 9.94 9.34
Project’s Net Cash Flow***$111,752 $123,512
Return on Investment 0.39 0.45
* Final loan amount and buy-down will depend on implemented scope and final project costs
** Estimated Annual Cost Savings include only energy cost savings
*** Project’s Net Cash Flow is calculated over the existing useful life (EUL) of the equipment
Cash Flow Analysis
CC-LEAP provides expert guidance identifying financing opportunities available for public agencies and applying and
securing them for eligible agencies. Options that are available to the City of SLO include Cash and On-Bill Financing (OBF).
Additional details about OBF can be found in Appendix B.
The projected annual cash-flow for the City of SLO using Electricraft’s updated project cost quote is outlined below.
Est. PG&E
Principal
Loan
Interest
Est. PG&E
OBF Term
$188,813 0.0%10 years
Year Incentives &
Financing
Est. Utility
Savings
Total Cash
Inflows
Est. PG&E
OBF Payment
Total Cash
Outflows
Net Cash
Flows
0 $188,813 $188,813 ($195,120)($6,307)
1 $20,423 $20,423 ($19,637)($19,637)$786
2 $21,240 $21,240 ($19,637)($19,637)$1,603
3 $22,089 $22,089 ($19,637)($19,637)$2,452
4 $22,973 $22,973 ($19,637)($19,637)$3,336
5 $23,892 $23,892 ($19,637)($19,637)$4,255
6 $24,848 $24,848 ($19,637)($19,637)$5,210
7 $25,842 $25,842 ($19,637)($19,637)$6,204
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8 $26,875 $26,875 ($19,637)($19,637)$7,238
9 $27,950 $27,950 ($19,637)($19,637)$8,313
10 $29,068 $29,068 ($12,077)($12,077)$16,991
11 $30,231 $30,231 $30,231
12 $31,440 $31,440 $31,440
Totals $306,872 $495,685 ($188,813)($394,862)$111,752
The projected annual cash-flow for the City of SLO using Lee Wilson Electric’s project cost quote is outlined below.
Est. PG&E
Principal
Loan
Interest
Est. PG&E
OBF Term
$174,238 0.0%10 years
Year Incentives &
Financing
Est. Utility
Savings
Total Cash
Inflows
Est. PG&E
OBF Payment
Total Cash
Outflows
Net Cash
Flows
0 $174,238 $174,238 ($183,360)($9,122)
1 $20,423 $20,423 ($19,637)($19,637)$786
2 $21,240 $21,240 ($19,637)($19,637)$1,603
3 $22,089 $22,089 ($19,637)($19,637)$2,452
4 $22,973 $22,973 ($19,637)($19,637)$3,336
5 $23,892 $23,892 ($19,637)($19,637)$4,255
6 $24,848 $24,848 ($19,637)($19,637)$5,210
7 $25,842 $25,842 ($19,637)($19,637)$6,204
8 $26,875 $26,875 ($17,475)($17,475)$9,400
9 $27,950 $27,950 ($10,070)($10,070)$17,880
10 $29,068 $29,068 ($9,231)($9,231)$19,837
11 $30,231 $30,231 $30,231
12 $31,440 $31,440 $31,440
Totals $306,872 $481,110 ($174,238)($357,598)$123,512
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Project Milestones and Activities
CC-LEAP will assist your agency with completing your energy efficiency projects in an expedited manner,with an anticipated
construction start date of August 2021. Your Project Manager, Rachel Pennington,will work with you to refine these
proposed dates and the project activities.
Milestone Date
Project Proposal Approval June 2021
Scope of Work approval July 2021
Council/Director Approval Date July 2021
Construction Start Date August 2021
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Appendix A: Financial Metrics Definitions
Gross Project Cost: the total of all construction costs for each measure including direct labor, materials,equipment, the
contractor’s adjustment factor and all task order processing fees.
Net Present Value (NPV):NPV takes into account the time value of money and indicates what a project’s lifetime cash flow is
worth today. NPV is determined by taking the sum of the present value of all current and future cash flows, including
purchase and installation costs, and future utility and maintenance savings.
Reimbursable Costs:Money returned by the utilities after the project has been installed with the Installation Report
submitted and approved.
Simple Payback Period (SPP):the amount of time required to recover the initial costs of a project from its savings.A simple
payback period ignores the time value of money and assumes that future savings occur in even amounts each year.For
example,a $1,000 investment that saves $500 each year has a two-year simple payback period.A project is economically
acceptable if the payback period is less than the length of the project life.
SPP = Net Project Cost ($) / Annual Savings ($/yr)
Financing Assumptions
Discount Rate 4%
Utility Escalation Rate 4%
Inflation Rate 3%
Estimates of potential Investor-Owned Utility (IOU)incentives and On-Bill Financing funding values are based on the most up-to-date
information available from the corresponding utility.Utilities reserve the right to change and/or terminate funding for Energy
Efficiency projects based on evolving priorities as determined by California Public Utilities Commission directives.These changes can
happen without notice.Furthermore,errors in submitted documentation,delays in project implementation,and lack of adherence to
utility program requirements can all impact the final IOU Incentive and On-Bill Financing values and approvals.
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Appendix B: On-Bill Financing FAQs
What is On-Bill Financing?
On-Bill Financing, or OBF, assists eligible customers finance their qualified energy efficiency projects.The loan is a
no-interest, no-fee loan repaid through the customer’s monthly energy bill.
Who is Eligible?
PG&E commercial, government, and nonprofit customers are eligible. To participate, you must:
●Have 24 months of billing history at the project site address
●Have zero disconnect or late payment notices within the last 12 months
●Have matching name and tax ID number included in the Customer’s billing account
●Select either the On-Bill Financing or On-Bill Financing with Incentives pathway
What are the Loan Limits?
Loan terms are a maximum of 120 months or 10 years.Loan amounts must be between $5,000-$250,000 per premise,
though an exemption of up to $4 million can be granted on a case by case basis. Loans above $250,000 may not be combined
with rebates or other incentives. Certain caps may apply, your CC-LEAP project manager will know if these caps apply to your
project.
How do I Apply?
Since this form of financing is available to current utility customers, the application and implementation process is relatively
streamlined and allows for easy adoption of energy efficient measures. Your CC-LEAP project manager will be happy to assist
you in this process.
How does it work?
Your CC-LEAP project manager will help along every step of the way to securing your OBF funds:
1.Submit the OBF application along with applicable Incentives Applications
2.The utility will review the OBF Application and the agency’s payment history
3.A utility engineer or approved third-party inspector will conduct a pre-inspection
4.Upon approval and inspection, the OBF funds will be reserved
5.Equipment Installation may begin upon receipt of loan approval
6.When installation is complete, submit an Installation Report to the utility
7.The utility will review the installation report
8.If approved, OBF funds will be distributed at this time
9.The first zero-interest loan repayment will appear on the next scheduled utility bill.
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Appendix C: Additional Funding and Financing Options
California Energy Commission (CEC) Energy Conservation Assistance Act Low Interest Loans
The California Energy Commission’s Energy Conservation Assistance Act (ECAA)program offers 1%interest loans
to public agencies to finance energy efficiency and energy generation projects.0%interest loans are also offered
annually on a competitive basis to qualifying school districts.
Advantages and Key Considerations:
●Maximum loan is $3 million per application;
●Applications are accepted on a first-come, first-served basis;
●Loan can fund 100% of project costs within a 17 year maximum simple payback;
●Loan must be repaid from energy savings within a maximum of 20 years;
●Application support provided by your CC-LEAP Project Manager
IBank California Lending for Energy & Environmental Needs (CLEEN) Center
Low-Interest Financing
The IBank CLEEN Center offers financing for public agency energy generation, conservation, and storage projects
through the Statewide Energy Efficiency Program (SWEEP)and the Light Emitting Diode (LED) Street Lighting
Program. SWEEP finances facility energy efficiency projects; the LED program finances street lighting upgrade
projects.
Advantages and Key Considerations:
●All or any part of the costs of construction and renovation are eligible for financing
●Applicants must demonstrate project-readiness and feasibility to complete construction within 2 years after
IBank’s financing approval
●IBank prioritizes projects in areas with high unemployment rates, low median family income, declining or
slow growth in labor force employment, or high poverty rates
●Applications accepted on a rolling basis
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