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City_of_SLO_SST_Southland_12.20.24_Final
PROPOSAL TO PROVIDE AN INVESTMENT GRADE AUDIT AT Southland Industries 12131 Western Avenue Garden Grove, CA 92841 Lic #: 114040 THE CITY OF SAN LUIS OBISPO ©Southland Industries 2024, All Rights Reserved. Proposal to Provide an Investment Grade Audit at The City of San Luis Obispo CONTENTS 1 | EXECUTIVE SUMMARY ....................................................................................1 2 | PROJECT DELIVERY APPROACH .................................................................5 2.1 Investment Grade Audit Strategy .........................................................................5 2.2 Implementation Strategy ......................................................................................6 2.3 Subcontractor Selection Methodology .................................................................7 2.4 Performance Period Services ..............................................................................7 2.5 Methodology for Lifecycle Cost Analysis ............................................................7 2.6 Commissioning ....................................................................................................8 2.7 Operations and Maintenance .............................................................................8 2.8 Proactively Work with Regulatory Agencies ........................................................8 3 | PROJECT TEAM ................................................................................................9 3.1 Organizational Chart ............................................................................................9 3.2 Resumes ............................................................................................................10 4 | ENERGY CONSERVATION MEASURES ......................................................13 4.1 Solutions Approach ............................................................................................13 4.2 RFP Identified ECMs .........................................................................................13 4.3 Additional ECMs .................................................................................................17 4.4 Project Schedule ................................................................................................19 5 | FUNDING YOUR PROJECT ...........................................................................20 5.1 Financial Solutions: Securing Utility Rebates & Incentives for the City of SLO 20 5.2 Project Financing ...............................................................................................21 6 | PREVIOUS EXPERIENCE ..............................................................................24 6.1 Experience with Similar Customers, Facility Types, & Recommended Measures ......................................................................................................................24 6.2 Project Experience .............................................................................................25 7 | SAFETY, DIVERSITY, & SUSTAINABILITY .................................................28 7.1 Safety .................................................................................................................28 7.2 Diversity .............................................................................................................28 7.3 Sustainability ......................................................................................................28 8 | PRICING & RATES ...........................................................................................29 8.1 Total Fixed Price Cost ........................................................................................29 8.2 Financial Spreadsheets .....................................................................................29 8.3 Profit, Overhead, & Total Mark-up .....................................................................30 8.4 Closing ...............................................................................................................30 1 | ExECUTIvE SUMMARy The City of San Luis Obispo (“SLO” or “the City”) and the City’s Office of Sustainability and Natural Resources (OSNR) continue to demonstrate their commitment to a sustainable future by partnering with Pacific Gas and Electric Company (PG&E) in the use of the Sustainable Solutions Turnkey (SST) program. This program provides a comprehensive, collaborative, and streamlined process to advance the City’s carbon neutral goals as outlined in the Climate Action Plan (CAP) and the Carbon Neutral City Facilities Plan (CNCFP). This step enables the City to “Lead by Example” and inspire others within the community to follow suit. Southland Industries (Southland) is honored to be invited to submit our proposal to partner with the City to achieve its goal of carbon neutrality by 2030. With extensive experience developing and delivering mechanical solutions and sustainable energy upgrades, we bring the collaboration, expertise, and commitment needed to drive meaningful environmental change, reduce operational costs, and improve energy efficiency across City facilities. Our approach is designed to meet this ambitious effort of carbon neutrality and provide long-term value and sustainability for the City and its residents, supporting the “Sustainable SLO” motto. Converting the City’s systems to electric demonstrates a solid commitment to meeting its carbon neutral goals. Installing additional solar photovoltaic (PV) systems to support year-round pool heating with all electric heat pumps at the Swim Center, converting fossil fuel-burning heat sources to electric in City buildings, and installing new lighting and controls provide the City a strong foundation to build upon and make these goals a reality. These accomplishments will spotlight remarkable strides in meeting the City’s CAP and CNCFP goals while providing the City the ability to accurately measure and report the State’s Senate Bill (SB) 32 and Executive Order (EO) 12-8 achievements. Southland’s experience working with SLO and our energy and mechanical capabilities will enable the City to make significant progress toward its near and long-term sustainability goals. The identified energy conservation measures (ECMs) reduce energy use by 58% and greenhouse gas (GHG) emissions by 61%, showcasing the City’s commitment to the environment and the strides made by the OSNR team to become a carbon neutral city. 1 | ExECUTIvE SUMMARy Carbon Reduction Progress Reduce: Natural Gas Purchases by 85% Reduce: Total Energy Usage 58% Eliminate: 61% GHG of ECM Portfolio Eliminate: 448 Metric Tons of GHG Emissions Annually Project Schedule IGA: 4 months Construction: 16 months Financials Project Cost: $6,981,423 Estimated Incentives: $495,824 Project Cost after Incentives: $6,473,599 Annual Savings: $82,323 Identified Potential Capital Lead by Example Funds: $1,500,000 The City of San Luis ObispoSouthland Industries 1 The City of San Luis ObispoSouthland Industries 2 1 | ExECUTIvE SUMMARy Project Summary Beyond the decarbonization of City buildings, the Southland-identified additional ECMs provide important systems that offset the City’s newly acquired electrical load. While carbon-free, new electric heating and cooling systems increase utility costs for the City. To help the City control and minimize future budget impacts, we recommend expanding Pv capacity at the Swim Center to insulate the City from utility rate increases and help minimize costs for proposed electrified systems. Additionally, improvements will enhance reliability, eliminate costly and time-consuming maintenance issues, and improve occupant comfort while reducing energy consumption. Summary Table of Project/Investment Grade Audit (IGA) Costs Technical Solution to Achieve Decarbonization & Electrification Southland’s solution leverages existing infrastructure, available land, and previous investments observed in the RFP site walk, to which we add our engineering, energy, construction, and installation expertise. After reviewing the site’s systems and operation and comparing its energy use to its near- and long- term needs, Southland calculates an 85% reduction in gas consumption as a result of implementing the request for proposals (RFP)-identified ECMs. This will reduce the City’s GHG emissions by over 448 metric tons, placing the City firmly on the path to carbon neutrality. To support the implementation of this project, Southland has identified $325,000 in utility incentives and $295,000 in Investment Tax Credits (ITC). In addition to these credits and incentives, using the City’s 2023-25 Financial Plan as a guide, we have identified $1.5 million in “Lead by Example” funds and an additional $65,000 in Local Revenue Measure (LRM) funds, which target scope within identified measures. Leveraging these funds in the recommended project will significantly reduce overall financing costs and required capital buydown. Southland is committed to collaborating with the City on the best use of these funds and identifying other funding and financing sources that support the best financial solution for the City. Project Costs & Savings ECM #Description Project Cost Incentives and Tax Credits Net Cost O&M Savings Total Annual Savings Simple Payback (Years) RFP Identified ECMs 1 Decarbonization at Swim Center $4,500,053 $415,503 $4,084,550 $24,000 $8,629 >30 2 Boiler Replacement at City Hall $1,161,819 $35,815 $1,126,004 $18,000 $16,683 >30 3 Furnace Replacement (Cy & LCC)$727,497 $10,874 $716,623 $3,500 $3,112 >30 4 DER/Peak Shaving (SC, CH, Cy, LCC)$273,849 $- $273,849 $- $25,215 10.9 5 LED Lighting Upgrades (PS, C&CL, P&RO)$306,206 $33,632 $272,574 5,000 $28,684 9.5 Performance Assurance $12,000 ($12,000) Total RFP-Identified ECMs $6,981,424 $495,824 $6,473,560 $50,500 $82,323 >30 Project Cost IGA Cost RFP Identified ECMs $6,981,424 $0 Additional ECM Opportunities $486,738 $0 The City of San Luis ObispoSouthland Industries 3 1 | ExECUTIvE SUMMARy Partnering with PG&E and the City of SLO Southland’s development and construction process is built on client collaboration, with our partnership beginning during the IGA. During the IGA and throughout the project lifecycle, PG&E and the City will have a single point of contact to ensure consistent communication and open and transparent issue resolution. Southland’s project development and delivery model is designed to minimize issues and reduce client risk. Design-Build Expertise We are a company of builders, and our whole organization is built around designing refined solutions to difficult technical problems and then constructing those solutions in the safest, most cost- efficient way possible. This revolves around our core capabilities of: ECM #Description Project Cost Incentives and Tax Credits Net Cost O&M Savings Total Annual Savings Simple Payback (Years) Additional ECM Opportunities 6 Retro-commissioning at City Hall $40,267 $25,596 $14,671 $- $18,954 0.8 7 Electrify DHW at Corp yard $21,404 $4,814 $16,590 $- $(900)- 8 Additional Pv at Corp yard $407,530 $95,000 $312,530 $- $27,718 11.3 9 Electrify Kitchen Equipment at LCC $17,537 $- $17,537 $- $(405)- Total Additional-Identified ECMs $486,738 $125,410 $361,328 $- $45,367 8.0 Total All ECMs $7,468,161 $621,234 $6,834,927 $50,500 $127,690 >30 Self- Performance Whether we self-perform or execute via subcontract, Southland infuses our deep construction expertise in all aspects of the project, such as 30-60-90 plan checks, constructability reviews, detailed critical path, look-ahead scheduling, and permitting. Southland’s self-performance capabilities provide our clients with better quality, cost control, and constructability of their projects. Preconstruction Southland’s preconstruction team facilitates constructability reviews and material and equipment selections, which have proven best value and provide the lowest long-term lifecycle cost. This process also allows our team to analyze prefabrication possibilities, increasing installation efficiency, safety, and quality while lowering costs and streamlining the schedule. Prefabrication Using our prefabrication facilities enables Southland to manage materials, provide superior installation, and deliver safer projects more efficiently. From unique fabrication techniques that drive efficiency to our highly skilled tradespeople, our prefabrication capabilities can minimize construction time. Lean Construction Eliminates waste from unnecessary process steps and over-designed solutions and minimizes costs by efficiently deploying material and labor resources. Lower cost provides the City with faster ECM payback, more ECMs for the financed dollar, and greater potential savings by delivering larger, deeper retrofits. Southland is headquartered in California, where we employ over 1,150+ engineers, energy experts, constructors, and maintenance personnel across the state. The City of San Luis ObispoSouthland Industries 4 1 | ExECUTIvE SUMMARy Southland is not simply an energy service company. We are a best-in-class design-build mechanical, electrical, and plumbing (MEP) contractor with deep energy expertise, uniquely able to integrate world-class energy solutions with internal preconstruction, design engineering, constructability, and service expertise. Southland has experience delivering decarbonization and energy solutions throughout California and, most relevantly, in the Central Coast region, including our work at the City of SLO, the City of Santa Maria, and the Cambria Community Service District. This experience and our local presence reduce project risk as our teams create early cost certainty through comprehensive preconstruction plans and detailed ECM constructability reviews. Southland is committed to providing solutions best suited for the City. As your full lifecycle partner, we will work hand-in-hand with you during the IGA for the final selection of ECMs that best meet the needs and goals of your buildings. Southland’s design-build team provides the City and OSNR teams with a knowledgeable, skilled, and collaborative team to make carbon neutral goals a reality. Safety Southland aims to provide all our clients, employees, and subcontractors with the safest environment possible. Safety is integral to every aspect of our process, from IGA development to final project closeout. This protects everyone’s well- being and helps ensure minimal disruptions and schedule delays. Our safety Experience Modification Rate (EMR) is among the top 5% in the nation. Training Using in-house technicians, our training programs provide comprehensive instruction on start-up, operation, troubleshooting, maintenance, and repair of equipment and systems modified or installed under each ECM. California Contractors Licenses Southland, license #114040, holds the following California contractors licenses: • B: General Building Contractor • C-4: Boiler, Hot Water Heating, and Steam Fitting • C-16: Fire Protection • C-20: Warm-Air Heating, ventilation, and Air Conditioning • C-36: Plumbing • C-38: Refrigeration • C-43: Sheet Metal 2.1 INVESTMENT GRADE AUDIT STRATEGY The first step in a successful energy project is planning and execution of the investment grade audit, which forms the basis for the solutions to be designed and installed. Southland’s team during the IGA is comprised of innovative thinkers who are leaders in the design and construction industry. Starting in the IGA, our delivery approach is highly collaborative and encourages client engagement. We plan to retain the same team for the duration of the project. The City will benefit from continuity throughout the entire project, from the IGA through preconstruction, final design, construction, measurement and verification (M&V), and support of operations and maintenance (O&M). Southland embraces every project as an opportunity to build a trusted partnership with our clients, beginning with our collaborative, client-focused IGA approach. We will learn about your buildings, how they operate, and the team supporting and maintaining them. Our multi-step approach to solution development is designed to efficiently evaluate the City’s buildings and utility use and identify beneficial ECMs. Southland’s in-house design engineers and preconstruction professionals are a key aspect of our approach, providing this project with multiple benefits, including: • ECMs are designed to be constructable. Design or constructability issues are identified and solved before the project is implemented, providing cost certainty by eliminating contract change orders and associated cost increases. • ECM savings and cost certainty. ECMs are identified early to ensure the mix of ECMs and the associated financial solution meet the City’s technical and financial goals. • ECMs are designed for maximum lifecycle value. Long-term reliability, sustainability, maintainability, and savings persistence are prioritized when determining solutions. • Early and accurate baseline development. Early involvement from our performance assurance team ensures that post-construction performance is properly tracked and validated. • Reduced risk. Changes during implementation due to poorly defined scopes are avoided, thereby reducing risk. Build Consensus on ECM Priorities At the IGA kickoff meeting, Southland will review the identified ECMs and discuss additional ECMs that may be a priority to ensure we have clear direction and a complete understanding of City goals for this project. Building this consensus on priorities early ensures the effective use of City staff’s time and expedites the IGA process. Collaborate Through Development Clear communication is paramount to success. Southland’s project development communication plan will keep all stakeholders and staff updated and ensure feedback is integrated into the project ECMs. Our team will schedule reoccurring meetings with City stakeholders to serve as a conduit for communication. Before each call, a proposed agenda will be issued to all participants. These meetings will address progress updates, the status of requests for information, and any issues that may require discussion or resolution. 2 | PROJECT DELIvERy APPROACH Southland Industries 5 The City of San Luis Obispo 2 | PROJECT DELIvERy APPROACH Southland will work together as “one team” with PG&E and the City to coordinate design review to ensure an optimized project. This includes review at the 30%, 60%, and 90% stages, with ample time for the City to review, provide comments, and resolve questions. The City of San Luis ObispoSouthland Industries 6 2 | PROJECT DELIvERy APPROACH In addition to the regularly scheduled meetings, Southland will facilitate a series of workshop sessions to ensure key stakeholders are engaged and in agreement on all critical development decisions. Engagement and concurrence in these workshops shorten the development process and ensure the final solution aligns with priorities and future plans. Each workshop session is progressive and interrelated to ensure City stakeholders are fully aware and agree with the key project components like scope, baselines, M&V strategy, financing arrangements, construction schedule details, and O&M support. This minimizes the risk of major changes and delays before construction and allows for broader project awareness across the organization. By listening closely to stakeholder input and aligning the project to meet their expectations, Southland will ensure your project meets energy reduction goals, financial goals, and directly supports the City’s broader decarbonization vision. Expertise, Tools, & Experience to Deliver IGAs Quickly Southland’s energy engineering team has already built several eQuest energy models of City buildings to evaluate ECMs in this proposal. During the IGA, we will further calibrate these models to identify and validate ECM concepts that support project criteria. Our development team will promptly finalize ECM scopes and assemble competitive firm fixed pricing with support from our network of local proven subcontractors. With this information, Southland creates real-time comparisons of different ECMs to quickly determine project feasibility and potential project funding and financing options. The City’s collaboration in this game boarding session allows Southland to rapidly develop a solution that fits its criteria. 2.2 IMPLEMENTATION STRATEGY Southland has partnered with PG&E on many successful SST projects over the last seven years, many completed in multiple phases, delivering over $7.4 million in annual savings. Our extensive past and present collaboration with PG&E, deep knowledge of municipal contracting processes, and well-honed implementation approach make us fully prepared to successfully develop and build this project with the City. Comprehensive Implementation Capability Southland has a strong local presence on the Central Coast and has completed several projects within the Central Coast area. Our local project manager will provide the City with exceptional oversight with rapid response capabilities ensuring that you project is a success. Additionally, Southland can reduce outsourced labor by prefabricating select elements of the project at one of our three in-state fabrication shops to be installed by our own mechanical, sheet metal, and plumbing personnel or our partners. This capability allows us to reduce overall project construction time and provide streamlined construction processes to deliver your project with fewer disruptions. Implementation Strategy for Work at Operational Buildings Performing any type of construction in operational buildings is a complex and challenging undertaking that requires careful logistical planning and preparation to ensure the safety and productivity of staff are not jeopardized. Southland will leverage our experience working in these conditions to create a customized implementation plan that prioritizes safety and reliable operations above all else. Three-week look-ahead schedules will provide advanced notification of work in occupied spaces to avoid impacting staff comfort or productivity. Ludwick Community Center: Southland develops calibrated eQuest models to accurately determine energy savings. The City of San Luis ObispoSouthland Industries 7 2 | PROJECT DELIvERy APPROACH 2.3 SUBCONTRACTOR SELECTION METHODOLOGY Before subcontractor selection, Southland will meet with the City and research existing projects to ensure that we include any preferred contractors in our solicitations. For example, we have collaborated with contractors known to the City, such as JR Barto, Smith MEP, Electricraft, Thoma Electric, and 3C Engineering, who are familiar with the City and have a proven ability to provide high-quality work. Southland employs a rigorous subcontractor sourcing process to select partners who share our commitment to quality, safety, and technical performance. All potential subcontractors undergo an evaluation and vetting process before working with Southland. We require prospective subcontractors to demonstrate the following: • Financial resources, bonding capacity, insurance, and long-term stability are sufficient to complete the work. • Technical qualifications, capability, and resources; available workforce by trade or system equipment specialty, licenses, and certifications. • Ability to meet the project schedule milestones considering all other business commitments. • Integrity and satisfactory record of performance. • Necessary production, technical equipment, and facilities. • Requisite organizational experience, operational controls, and technical skills. • A track record that demonstrates a commitment to safety. Our subcontracts are awarded competitively via a subcontract RFP package issued to prequalified subcontractors, including small business set-asides and diverse suppliers. This standard process will enable us to comply with or exceed all PG&E and City subcontracting requirements. 2.4 PERFORMANCE PERIOD SERVICES During the IGA and in collaboration with PG&E and the City, Southland will create a customized M&v plan for the proposed ECMs. This plan will provide a framework of actions designed to ensure the project creates and sustains the anticipated cost savings and carbon reductions. A post-installation report will document installed equipment quantities, capacities, and savings benefits realized during construction. New equipment and systems will be logged and inspected to ensure they operate as intended. Any deficiencies will be identified and corrected to minimize disruptions and lost savings. The City can use the data collected by the M&v team to provide accurate progress reports of the carbon reduction achieved with the measures implemented, as called for in CAP Administrative Action 2 and the Lead by Example Plan. 2.5 METHODOLOGY FOR LIFECYCLE COST ANALYSIS The proposed ECMs developed for the City will impact many aspects of the City’s operations and budgets for several years. When weighing and comparing future benefits of alternative project strategies, Southland utilizes the Federal Energy Management Program (FEMP) Building Lifecycle Cost (BLCC) software tool developed by the National Institute of Standards and Technology (NIST). This program allows evaluation of the costs and benefits of design alternatives with varying initial capital, utility, operating, and maintenance costs to guide the decision process throughout the IGA. Lifecycle cost analysis (LCCA) is a comprehensive decision process leading the project Southland will verify system performance and savings are achieved during the performance period. The City of San Luis ObispoSouthland Industries 8 2 | PROJECT DELIvERy APPROACH team through comparison of available alternatives. At Southland, we continuously evaluate LCCA throughout project development to weigh available alternatives and iterate each to find the optimal outcome. 2.6 COMMISSIONING Southland knows the importance of post-installation testing to confirm that projects have been installed correctly and will perform as designed. This is even more critical for energy projects where the funding source directly results from the energy savings achieved through the performance of the new equipment. Our commissioning engineer prepares a mechanical, electrical, and plumbing start- up and commissioning plan for project-installed equipment and coordinates with all involved parties to guide interim milestone tracking such as point-to-point checkouts, field-installed control device commissioning, factory start-ups, and functional performance testing. This early engagement with City staff and maintenance personnel provides the City with familiarity and knowledge of the new systems and their operational requirements. 2.7 OPERATIONS AND MAINTENANCE In addition to our commissioning protocol and as part of the IGA process, Southland will collaborate with the City and its facility staff to review O&M responsibilities for each ECM. These discussions will revolve around the following concepts: • Southland develops comprehensive O&M plans with input from the City and maintenance personnel. • All O&M and training programs are customized based on specific City goals and needs, long-term performance, and cost-effectiveness based on the type and complexity of equipment and systems, usage patterns and standard practices, in-house capabilities, and City preferences. • Our O&M services ensure the installed systems are operating properly and in accordance with their design and all manufacturers’ specifications and that the ECMs generate the required energy savings. • Southland will develop customized training programs for City facility personnel. • Southland service technicians can also augment maintenance personnel capabilities and provide ongoing training as requested by the City. • If O&M services are desired as part of the project, Southland will work with the City to identify appropriate funding sources, such as energy and non-energy-related cost savings. 2.8 PROACTIVELY WORK WITH REGULATORY AGENCIES Coordination with the regulatory agencies at both state and local levels is critical in ensuring compliance with building codes and overall safety requirements. Southland identifies all potential submissions early in the IGA phase and proactively engages the regulatory agencies to accurately account for the necessary time and costs of this important process. Our design submittals, permitting applications, and associated inspections will account for the input and approval of the local representative from the City’s planning department, county fire marshal, utility engineers, and any other applicable regulatory agencies. This engagement ensures that PG&E and the City receive an accurate budget and schedule for approvals. During the O&M phase, Southland will verify that all upgrades are generating the required energy savings. Southland is an energy services company built on a design-build construction platform, allowing us to leverage our internal engineering, preconstruction, and construction professionals to ensure that projects are designed for rapid, smooth construction and long-term operational efficiency. This integrated delivery approach, which holistically views a building’s entire lifecycle, results in higher-value outcomes. Our management approach keeps key individuals involved from initial development through final project acceptance, ensuring successful transitions between project phases as well as clarity and alignment with client goals. The result is better continuity between the IGA, design, and construction phases, lower project risk, and improved long-term project performance. The organizational chart below highlights the structure of our proposed team. The resumes in Section 3.2 outline the role of each team member for the project and their relevant project experience. A staff of 1,150+ California-based employees will support our core team and can draw from over 6,800 Southland employees nationwide to meet the project needs. Southland’s project manager, Eric Penningroth, lives locally in SLO and will be able to be onsite daily reducing related travel costs and providing keen project oversight. 3.1 ORGANIZATIONAL CHART 3 | PROJECT TEAM 3 | PROJECT TEAM Performance Assurance/M&V Engineering Team Performance Assurance Mgr Bimal Kaur, CMvP Project Manager Eric Penningroth Internal Design/ Precon Team Principal Engineer Precon/Design Derek Kilian, PE Development Team PV Engineer virak Dee, PE Solutions Developer Marshall Noble, PE Construction Management Team FUNCTIONS • Scope development • Energy engineering • Bid packages and costing • Financial analysis FUNCTIONS • Design/code review • Trades/ constructability review • Estimating/ scheduling • Engage specialty subconsultants FUNCTIONS • Site management • Supervise subcontractors • Project meetings/ minutes • 3-week look ahead • Commissioning/ quality control FUNCTIONS • Baseline measurements • Incentives/tax credits • Update energy savings • Installation report • Annual reports • Mechanical/controls service Performance AssuranceConstructionPreconstruction/Design Safety Manager Monica Brooks, CHST, OHST IGA/Project Development Project Developer Tom yutko, PE Project Executive Simon Perkins Account Manager Alicia Bender Sustainability Team Director of Sustainability Eric Nyenhuis, PE Sustainability FUNCTIONS • Utility & baseline analysis • Power quality studies • Energy master plans • Infrastructure planning • Engineering assessments & studies The City of San Luis ObispoSouthland Industries 9 The City of San Luis ObispoSouthland Industries 10 3 | PROJECT TEAM Project Roles & Responsibilities: PG&E and the City’s point of contact and advocate. Maintains clear communications with leadership and staff during project development. Leads client workshops to align all stakeholders throughout the process. Remains engaged with PG&E and City to ensure that deliverables are consistent with expectations and respond to questions and issues. Relevant Experience: Over 19 years of experience assisting clients through all aspects of energy efficiency projects, including funding and financing programs. Multiple PG&E SST projects, including City of Santa Maria Phase I & II, City of Chico Phase I & II, Department of State Hospitals (DSH)-Coalinga, and DSH- Metropolitan. Project Roles & Responsibilities: Leads the IGA and project development phase. Collaborates with the project team to ensure scope, design, and implementation strategy meet City stakeholder requirements. Collaborates with the Project Executive to plan and conduct the transition from project development to construction. Relevant Experience: Over 18 years of experience in engineering and construction. Tom specializes in navigating complex design- build work and is dedicated to delivering successful projects. Previous experience includes Task Order (TO)-2 Fleet Readiness Center, Coronado, CA; Hologic Pearl Fusion Lab, San Diego, CA; and Nielsen BioSciences, San Diego, CA. Percent Time on IGA/Const.: 50% / 5%Percent Time on IGA/Const.: 50% / 20% ALICIA BENDER Account Manager TOM YUTKO, PE, CEM Project Developer 3.2 RESUMES Project Roles & Responsibilities: Leads the development of sustainability strategies, with a focus on energy efficiency, decarbonization, and electrification initiatives. Supports the development of a coordinated technical and financial approach to achieving and sustaining net zero that leverages all applicable incentives and tax credits and includes required M&V. Relevant Experience: Over 30 years of experience delivering energy master planning and consulting, financial analyses, development, and demand management/response. Experience includes Sutter Health SST projects, DSH- Coalinga SST, South San Luis Obispo County Sanitation District, City of San Luis Obispo Water Treatment Plant SST, and Fort Hunter Ligget. Percent Time on IGA/Const.: 20% / 20% ERIC NYENHUIS, PE Director of Sustainability Project Roles & Responsibilities: Responsible for the identification, evaluation, and technical development of ECMs. Coordinates ECM scopes of work through a preliminary design. Provides auditing, lifecycle cost analysis, energy calculations and modeling, and economic analysis. Relevant Experience: Over 15 years of experience developing and implementing comprehensive projects that reduce energy consumption, minimize operating costs, and decrease carbon footprints. Marshall has developed and implemented over $550M in energy conservation projects. Experience includes Nellis Air Force Base, NV; Fort Carson, CO; and the University of Hawaii, HI. Percent Time on IGA/Const.: 50% / 20% MARSHALL NOBLE, CEM, CMvP, BEP Solutions Developer The City of San Luis ObispoSouthland Industries 11 3 | PROJECT TEAM Project Roles & Responsibilities: Collaborates with project development, preconstruction, and construction teams to refine each ECM into detailed implementable scopes of work, leveraging our best practice construction techniques. Prepares basis of designs, system concepts/designs, cost estimates, and construction design documents. Relevant Experience: Licensed professional engineer with 13 years of experience designing mechanical systems for critical facilities. Derek is experienced in executing projects in California for compliance with Title-24 and the Division of State Architect (DSA). Previous experience includes Sutter Lakeside Hospital SST, University of the Pacific SST, and Pomona Unified School District. Project Roles & Responsibilities: Designs, develops, and optimizes Pv infrastructure solutions. Performs electrical load calculations to ensure the project can support project goals. Ensures designs comply with industry standards, local codes, and grid interconnection requirements. Relevant Experience: Licensed mechanical engineer with 24 years experience with energy efficiency. Developed various computer tools to model complex energy systems. Experience with energy efficiency of mechanical systems provide him the ability to design and develop innovative solutions for clients. Experience with SST projects includes the City of Chico, the City of Santa Maria, Sutter Mills Peninsula Hospital, and Sutter Navato Hospital. Project Roles & Responsibilities: Oversees the project construction team. Develops a Site-Specific Staffing and Implementation Plan, collaborates with the procurement lead to develop the Subcontracting Plan, qualifies and selects potential subcontractors, develops ECM Quality Control Plans and Construction Schedule, and ensures all costs are identified and presented in a compliant format. Relevant Experience: Over 35 years of experience in the construction and energy efficiency industries supporting municipal, state, and education clients in California. Previous experience includes California Correction Center Susanville, Taft Correctional Institute, and Pomona Unified School District. Percent Time on IGA/Const.: 10% / 20%Percent Time on IGA/Const.: 50% / 20% Percent Time on IGA/Const.: 10% / 85% DEREK KILIAN, PE Principal Engineer, Preconstruction/Design VIRAK DEE, PE Photovoltaic Engineer SIMON PERKINS Project Executive Project Roles & Responsibilities: Oversees the daily activities of construction. Allocates and manages resources for implementation. Coordinates specification review, pricing, contractor selection, compliance, commissioning/ start-up, and management of construction, and documentation. Manages project costs, monitors labor, and is responsible for project modifications. Relevant Experience: Over nine years of experience managing the implementation of energy efficiency projects in the State of California. A San Luis Obispo County native and Cal Poly graduate, Eric is familiar with the City of SLO and its regulations. Previous project experience includes the City of Santa Maria, Pomona USD, and SAP Center Retrofit. Percent Time on IGA/Const.: 10% / 85% ERIC PENNINGROTH Project Manager The City of San Luis ObispoSouthland Industries 12 3 | PROJECT TEAM Project Roles & Responsibilities: Develop and maintain performance assurance plans and provide performance reports. Monitors critical equipment points, utility meters, and energy monitoring systems. Responsible for tracking and informing the project team on the status of project savings during construction and through the performance period. Relevant Experience: Over 16 years of experience in energy efficiency and sustainability space supporting federal, municipal, higher education, K-12, and healthcare clients. Has supported multiple PG&E SST projects, including DSH-Coalinga, DSH-Metropolitan, and the City of Chico. Percent Time on IGA/Const.: 10% / 20% BIMAL KAUR, CMvP, LEED AP Performance Assurance Manager Project Roles & Responsibilities: Develops, reviews, and implements site-specific plans for the project that prioritizes safety practices for all project work activities. Safety plans will be made a part of all project scheduling and will require approval before work commences. Relevant Experience: 24 years of industry experience specializing in developing and implementing injury and illness prevention plans, monitoring and coordinating safety programs that include safety inspections, accident investigations, safety training, and workforce monitoring. Relevant experience includes DSH-Metropolitan, City of Santa Maria, and Pomona Unified School District. Percent Time on IGA/Const.: 5% / 20% MONICA BROOKS, CHST, OHST Safety Manager 4.1 SOLUTIONS APPROACH The City has joined the State of California and many other cities and counties across the state to reduce GHG emissions, with the goal of becoming carbon neutral by 2030. The City has made progress in meeting this goal by implementing projects, including electrifying its fleet vehicles, replacing natural gas systems with electric, and installing clean energy-producing PV systems at City buildings. Southland will assist the City on its path to carbon neutral operations by providing comprehensive solutions that eliminate fossil fuels in its buildings, generate electricity from clean, renewable sources, and improve the efficiency of the heating, cooling, lighting, and control systems. Southland will utilize proven technologies and designs that assure the City it will continue to deliver exceptional and uninterrupted services to its community. Achieving carbon neutrality and electrifying fossil fuel equipment heavily relies on using heat pumps. We will select equipment that operates with next-generation refrigerants to proactively address the phase-out of refrigerant R-410a, which begins in January 2025. This forward-thinking strategy ensures access to cost-effective replacement refrigerants throughout the equipment’s lifecycle. Improving building energy efficiency without compromising occupant comfort is a core principle of Southland’s designs. Doing so properly prepares building systems to create maximum benefit from renewable energy systems generating carbon-free electricity. 4.2 RFP IDENTIFIED ECMS 4.2.1 ECM-1: Swim Center Decarbonization Including the Options of Solar Thermal and Heat Pump Strategies to Heat the Pool. Decarbonizing the Swim Center’s pool heating and domestic water heating systems is a significant step in achieving the City’s 2030 emissions reduction goals. It will also be a highly visible statement to the community of the City’s commitment to its carbon neutrality goal. The Swim Center’s largest energy draw is generated by heating the two pools and domestic hot water for showers. These systems account for over 40% of the City’s total energy usage, making the Swim Center the largest energy consumer and producer of emissions in the City’s building portfolio. Solar Thermal: While solar thermal systems effectively heat water, they require diligent, costly, long-term maintenance, resulting in reduced reliability and higher lifecycle costs. Solar thermal systems have an average life span of 10 to 15 years and often require panel replacement by year 10. For these reasons, Southland does not recommend installing a solar thermal system at the Swim Center. Instead, we recommend replacing the existing natural gas boilers with electric heat pumps and 4 | ENERGy CONSERvATION MEASURES 4 | ENERGy CONSERvATION MEASURES The City of San Luis ObispoSouthland Industries 13 Southland has helped clients across California decarbonize their facilities and achieve net zero emissions. Swim Center Electrical Profile Converting Gas Systems to Electric & Additional PV 339,134 kWh Remaing kWh for Purchase 238,539 kWhSouthland Proposed PV Production 428,318 kWhPlanned PPA PV Production The City of San Luis ObispoSouthland Industries 14 4 | ENERGy CONSERvATION MEASURES installing an additional onsite solar PV system to offset the increased electric load. This approach will decarbonize using cost-effective, more reliable, and longer-lasting proven systems. Main Pool: The water temperature in the swimming pool is heated year-round between 78⁰ and 82⁰ Fahrenheit (F). The main pool is heated by two 1500-MBH natural gas-fired condensing boilers, approximately ten years old and nearing the end of their effective service life. Southland will replace the two natural gas units with seven modular air-to-water heat pumps paired with a heat exchanger to heat the pool water indirectly. Our solution will effectively utilize the available space near the existing main pool mechanical room to meet the code clearance requirements of the new units. These units will be prefabricated on skids offsite at one of our three California prefabrication facilities, reducing costs and onsite construction time. Therapy Pool: The water temperature in the therapy pool is maintained between 88⁰F and 92⁰F year-round. One 399-MBH condensing boiler is used to heat the pool. Southland will install one packaged 529-MBH air-to-water heat pump to heat the pool water directly. This heat pump features an integral titanium heat exchanger, which is resistant to chemical corrosion and facilitates more efficient heat transfer. Domestic Hot Water: Domestic hot water used for the bathhouse sinks and showers is produced by two commercial-style 990-MBH heaters tied to a 328-gallon storage tank. These domestic water heaters are over 20 years old and are inefficient compared to modern units. Southland will replace these natural gas-fired units with air-to-water heat pumps that use natural CO2 refrigerant. This upgrade will not only electrify domestic hot water production but also utilize a refrigerant with one of the lowest environmental impacts compared to other commonly used refrigerants on the market. Solar Photovoltaic: Electrifying the pool heating and domestic hot water heating equipment will increase electrical usage at the Swim Center. To offset this increased electrical usage, Southland will install a total of 145 kW-dc solar PV system to generate 238,559 kWh of clean, renewable electricity with a combination of ground mount and canopy shade structures. In addition to generating clean, renewable electricity for the Swim Center, the canopy Pv system will provide shade for spectators in the bleachers. The proposed Pv arrays, along with the 262 kW-dc system that the City is installing, will offset 66% of the Swim Center’s entire load including the new electric heat pumps and domestic water heaters. During the IGA, Southland will work with the City to determine optimal PV sizes at the Swim Center based on the final designs of the City’s planned power purchase agreement (PPA) Pv project. 4.2.2 ECM-2: City Hall Space-Heating Boiler Replacement with Heat Pump The existing heating hot water (HHW) boiler at the City Hall building is over 30 years old, has exceeded its rated useful life, and needs to be replaced. Southland recommended replacing the boiler with two central air-to-water heat pumps to eliminate natural gas-fired heating, ventilation, and air conditioning (HVAC) equipment at City Hall and support the City’s goal to reduce onsite emissions by 50%. New heat pump systems offer 140⁰F hot water, less than the current 180⁰F design. To remedy this deficit caused by the new system, Southland’s solution will upgrade building zone-level heating coils to be consistent with the new supply temperature, ensuring equivalent heat output. Our proposed scope includes: Proposed solar PV at the Swim Center. The City of San Luis ObispoSouthland Industries 15 4 | ENERGy CONSERvATION MEASURES Replacing Natural Gas Boiler with Heat Pumps: Southland will replace the existing 760-MBH natural gas-fired boiler with two 443-MBH air-to-water heat pumps. The main electrical switchgear at City Hall is rated for 1200A. Based on the drawings provided and the fact that the City has already converted the interior lighting to LED, there appears to be sufficient capacity to install the new heat pumps without needing any electrical upgrades. During the IGA, Southland will perform an electrical load study to verify available electrical capacity and identify any additional electrical upgrades required to facilitate the installation of the new heat pumps. Heating Coil Replacements: To ensure occupant comfort is not impacted by replacing the boilers with heat pump units, Southland’s solution will replace 28 building zone-level reheat coils and the heating coils in the air handling units. The new coils will be designed to provide the air temperature needed to adequately heat the building with the 140⁰F degree hot water from the heat pumps. 4.2.3 ECM-3: Gas-Fired Furnace Replacement with Heat Pump (and Air Conditioning Units) at Corp Yard and the Ludwick Center. Replacing ten gas-fired HVAC units at the Corp Yard and Ludwick Center with heat pump equivalents will support the City’s sustainability goals and demonstrate their commitment to carbon neutrality within the community. Furthermore, the new units at Ludwick Center will replace end-of-life equipment, enhance reliability, increase occupant comfort, and reduce annual maintenance costs. The new equipment will operate using R-454B refrigerant, an environmentally friendly option that reduces the carbon footprint of the HVAC equipment. Transitioning to R-454B will also reduce City maintenance costs, as refrigerant R-22 is expensive and no longer readily available, and refrigerant R-410A is scheduled to be phased out starting January 2025. Southland will replace four direct expansion (Dx)/natural gas split system air conditioning (AC) units at the Corp Yard with air-source heat pumps to support the City’s decarbonization goals. The existing AC systems are air-cooled, with the four air-cooled condensing units located on the west side of the main building. Each condensing unit is connected to an indoor fan coil section fitted with a DX coil and furnace section. The existing systems are rated at 4 to 7-tons of cooling and 93-MBH to 127-MBH of heating and operate with R-410A refrigerant. The rooftop units (RTUs) at the Ludwick Community Center are over 20 years old and have surpassed their American Society of Heating, Refrigeration, and Air Conditioning Engineers (ASHRAE) expected service life. Additionally, the units utilize R-22 refrigerant, a hydrochlorofluorocarbon with high global warming potential. R-22 has been phased out under the Montreal Protocol due to its harmful environmental effects, making it difficult and costly to service equipment using this refrigerant. Southland will replace five RTUs with electric heat pump units and one split system AC unit with a new higher-efficiency system. 4.2.4 ECM-4: DER/Peak Shaving Opportunities Through BESS or Other DER Programs at the Swim Center, City Hall, Corp Yard, and Ludwick Center. Load-shaving strategies can help the City reduce its electrical costs by lowering the amount of energy drawn from the grid during periods of high demand costs. Southland has evaluated peak load-shaving opportunities at City Hall, Corp Yard, and Ludwick Center and will assist the City in implementing prescribed strategies at each location. Where economically feasible, Southland Southland, in partnership with PG&E, replaced gas-fired systems across city buildings for the City of Chico. The City of San Luis ObispoSouthland Industries 16 4 | ENERGy CONSERvATION MEASURES will combine battery energy storage systems (BESS) and traditional load-shedding sequences to minimize peak demand electrical costs. Most of the HVAC equipment is currently integrated into a city-wide energy management and control system (EMCS), which permits remote monitoring and control of these systems. This capability allows the City to effectively utilize PG&E’s demand response (DR) programs for load-shedding and control sequences and provides a practical solution for the City’s buildings. City Hall, Corp Yard, and Ludwick Center: These energy management and load-shedding strategies programmed into the City’s EMCS will enable participation in PG&E’s automated DR programs. PG&E offers many DR programs that provide incentive load reduction. Southland will work with the City and PG&E to determine the most cost-effective program available during the IGA. Identified DR strategies include: • Automated Duty Cycling and Start-up: HVAC equipment operation will be staggered to prevent demand spikes caused by starting all units within a 15-minute interval period, and units will be cycled to minimize average 15-minute demands. • Peak Load Shedding: Non-essential equipment connected to the EMCS will be turned off or slowed down during PG&E’s peak demand periods to maximize cost savings. During the IGA, Southland will identify non-critical loads that can be temporarily turned off without significantly impacting City operations. • HVAC Setpoint Adjustments: Heating and cooling setpoints will be relaxed in non-critical areas to reduce the load on chillers and electric heating equipment. Southland will identify specific areas throughout the facilities where setpoint can be relaxed without significantly impacting occupant comfort. • Battery Energy Storage Systems: Southland evaluated BESS at City Hall and the Ludwick Center, and there was not sufficient peak load demand or space required for the implementation of this measure. -Corp Yard: The Corp Yard is well suited for BESS as the building data shows significant fluctuations between on-peak and off-peak demand. Southland recommends a 20 kW/200 kWh BESS to store energy during off-peak times when electricity is less costly and discharge during peak times when electrical rates are high. Furthermore, the building is eligible to move to an Option S utility rate, which bills peak demand daily rather than on a monthly basis. During the IGA, Southland will refine this design to ensure that the BESS is properly sized to accommodate the increased electrical demand due to building electrification. Additionally, we will collaborate with PG&E to explore the City’s eligibility for their Distributed Energy Resources (DER) Partnership Pilot Program, which incentivizes participants to utilize their electrical generating assets to address local energy needs. Swim Center DR Strategies: Southland recognizes the importance of the consistent operations of the pool pumps, as they are essential for maintaining the cleanliness, safety, and overall health of the pools. For this, the City may not choose to incorporate DR strategies at this site. As part of ECM-1, the Swim Center will be equipped with the necessary controls to support effective demand management strategies for the new heat pumps if desired. During the IGA, we will discuss with the City reducing water temperatures by 1⁰F or 2⁰F in the pools, staying within the desired temperatures respective of each pool, as a potential DR strategy. • Battery Energy Storage Systems: -Swim Center: Southland evaluated the Swim Center for BESS to offset peak demand charges. Based on the assumption that the City electrifies the Swim Centers heaters and pumps, installs the planned PPA PV system of 262kW-DC, installs Southland’s proposed additional 146kW-DC PV system, and transitions to Option S utility rates, Southland The City of San Luis ObispoSouthland Industries 17 4 | ENERGy CONSERvATION MEASURES calculates that the expected payback for BESS exceeds the anticipated life of the system. For this reason, we do not recommend BESS for the Swim Center but are open to further development of this ECM if the City wishes to explore in greater detail. 4.2.5 ECM-5: Limited Lighting Upgrades at the Police Station, City-County Library, and the Parks and Recreation Offices. Upgrading the lighting fixtures throughout the Police Station, City-County Library, and the Parks and Recreation Office with LED technology will improve energy efficiency, reduce the City’s associated energy costs, and eliminate fluorescent lamps, which will not be available for sale in California after January 1, 2025, per CA AB 2208. The new LEDs will improve overall light quality, creating a more comfortable and productive work environment in these spaces. LEDs last up to five times longer than fluorescent lamps, which extends the time between routine maintenance and lessens the workload for City maintenance personnel. Most fixtures at these buildings are fitted with multiple linear T-8 lamps at 2’, 3’, and 4’ lengths. The City has standardized the upgrade of linear fluorescent fixtures using Troffer retrofit kits with bi-level controls. The controls function like an A-B switch, allowing each light switch to toggle between a higher brightness setting and a lower ambient setting. Southland will continue upgrades at the Police Station, City-County Library, and the Parks and Recreation Offices using the same approach. This simple control approach requires no special user or maintenance training as staff is already familiar with the system. 4.3 ADDITIONAL ECMS 4.3.1 ECM-6: Retro-commissioning According to Energy Star, the expected energy use intensity (EUI) for an office building in the City is 52.9 kBTU/SF. The City Hall building has an EUI of 62.4 kBTU/SF and is currently using at least 18% more energy than needed. Considering that the City has already upgraded its interior lighting systems to LED, the HvAC systems are believed to be using an excessive amount of energy. The HvAC systems are integrated into a Johnson Controls, Inc. (JCI) EMCS. Southland will optimize control sequences within the JCI EMCS to properly schedule equipment and minimize energy use in the building by implementing the following: Unoccupied and Occupied Scheduling and Temperature Setpoint Optimization: Results from Southland’s eQuest energy modeling and an evaluation of the electrical interval data indicate that the HVAC equipment is operating more hours than needed. The data shows that the HVAC equipment consistently turns off at 6:00PM, turns on at 8:00PM, and remains on until 2:00AM. We will meet with building operators to establish HVAC equipment schedules that align with the occupancy patterns. Static Pressure Reset: Southland’s engineers will work with the local controls technicians to reduce duct static pressure during low load conditions, which will reduce fan energy. Adjusting the static pressure setpoint based on feedback from the terminal units optimizes the operation of the air handling units (AHUs). Supply Air Temperature Reset: The supply air temperature setpoint will dynamically adjust based on real-time building heating or cooling demands. Currently, the supply air temperature is fixed at a specific set point regardless of the conditions within the building. Our control strategy will adjust the supply air temperature based on outdoor air temperature, zone temperatures, terminal unit damper position, or hydronic control valve position. By implementing a supply air temperature reset, the The City of San Luis ObispoSouthland Industries 18 4 | ENERGy CONSERvATION MEASURES City will reduce cooling energy during part-load conditions and minimize simultaneous heating and cooling in reheat systems. Heating Hot Water Temperature Reset: Based on discussions with City personnel, the hot water temperature setpoint at City Hall is manually set. Keeping a fixed temperature setpoint higher than needed during off-design conditions can lead to excessive energy usage. Southland will implement a strategy to adjust the temperature setpoint of the HHW based on the outside air temperature or feedback from individual zones. This control strategy will reset the hot water temperature based on real-time conditions. 4.3.2 ECM-7: Heat Pump Domestic Water Heaters at Corp Yard To help the City reduce onsite carbon emissions, Southland recommends replacing the 100-gallon domestic hot water heater at the Corp Yard, which uses natural gas, with a new equivalent- sized heat-pump domestic water heater. In cooperation with ECM-3, this will fully electrify all the equipment at the Corp Yard and reduce the carbon emissions of the building. The City is already familiar with this approach, having successfully replaced the natural gas water heaters with heat pumps at City Hall, the Police Station, and the Ludwick Center. 4.3.3 ECM-8: Additional Solar PV Installing solar Pv systems will allow the City to generate clean, carbon-free electricity, showcasing its commitment to the “Lead by Example” model and aiding its goal of achieving carbon neutrality by 2030. Southland evaluated the installation of solar PV systems at the City buildings identified in the RFP and found that both Corp yard and Swim Center have sufficient shade-free space to install these systems. For details regarding the Swim Center, refer to ECM-1. For Corp Yard, Southland will install an 87 kW-DC system on the roof of the building. This system will generate 152,303 kWh, supplying 86% of the electricity required for this building, including the increase in electricity usage resulting from the installation of new heat pumps detailed in ECM-3. As a part of the design and installation of solar Pv electric generation at the Corp yard, Southland will ensure that the building meter is on the most suitable and beneficial electrical rate tariff from PG&E to maximize the cost savings for this ECM. 4.3.4 ECM-9: Electrify Kitchen Equipment at Ludwick Center In conjunction with ECM-3, Southland will fully electrify the Ludwick Center by replacing the existing natural gas kitchen equipment with new electric kitchen equipment. The Ludwick Center is a hub for community gatherings and social activities, and this work will advance the City’s efforts to electrify cooking equipment as outlined in the City’s Carbon Neutral City Facilities Plan. Southland will remove the existing natural gas cooking equipment, upgrade the electrical infrastructure as needed, and install a new range with ten burners and two convections ovens. Unlike natural gas kitchen equipment, the new electric cooking equipment does not use open flames, minimizing fire risk. Furthermore, modern electric convection ovens reduce cooking times, provide uniform temperatures inside the oven, allow for multiple dishes to be prepared at the same time, and emit less heat than existing natural gas ovens, providing a more comfortable working environment. Proposed solar PV system at the Corp Yard. The City of San Luis ObispoSouthland Industries 19 4 | ENERGy CONSERvATION MEASURES 4.4 PROJECT SCHEDULE Southland is confident we can deliver the City’s decarbonization project from IGA through final completion within 24 months. Our qualified team has streamlined the development and implementation processes over our long history of performing work with PG&E through the SST program. This fast-paced schedule will deliver the desired energy and sustainability improvements quicker than the typical infrastructure improvement process familiar to the City. Our preliminary schedule is based on the proposed ECMs for all locations and incorporates numerous strategies to expedite work while ensuring safety and quality, such as: • ECMs with short lead time equipment, such as LED lighting and retro-commissioning, are started early in the schedule to immediately realize benefits and savings. • Design processes for long lead time ECMs, such as boiler and HvAC replacements, begin immediately so that equipment can be ordered as quickly as possible. • Work in occupied spaces is completed at convenient times for City personnel (second shift, for example) to minimize staff operations and productivity interruptions. Southland will refine this schedule during the development of the IGA to best meet the City’s project goals and expectations. Proposed Project Schedule for the City of SLO Southland is experienced in completing projects with tight deadlines and no room for error. Recently, we completed construction on the Intuit Dome in Inglewood, CA on-time ahead of the NBA season and scheduled events. Southland defines the structuring of project finance as “Financial Engineering.” This process is essential for successfully implementing project ECMs and is just as important as technical engineering. We begin to financially engineer projects early in RFP development and continue through the IGA phase to quickly determine which measures are viable to meet funding, financing, and available incentive requirements. This process is especially important due to the nature of the City’s project, switching to higher-cost fuel sources than previously used. Becoming carbon neutral and using clean electricity results in higher utility costs in the future. Most measures have little savings to cover the debt ratio compared to a traditional energy efficiency project. Recognizing the importance of mitigating project costs, Southland will diligently seek funding sources to reduce the overall financial burden of the project on the City. Similar to the concept of reducing the facilities’ electric load before installing Pv systems, our approach involves identifying tangible project funding to provide third-party payment towards project costs. Leveraging the federal funding provided by the Inflation Reduction Act (IRA) and ITC, we estimate a potential contribution of up to $295,000, based on achieving up to 30% credit for the PV and battery systems. Furthermore, we have identified utility rebates and incentives, projecting an additional value of up to $325,000 for the project from PG&E’s Measured Savings for Summer Reliability (MSSR) program. By securing federal and state grants on the City’s behalf, Southland will assist the City “in building up the short-, medium- and long-term capital program.” 5.1 FINANCIAL SOLUTIONS: SECURING UTILITY REBATES & INCENTIVES FOR THE CITY OF SLO The City has a remarkable record of obtaining grants for a variety of projects and initiatives, and Southland looks forward to extending this record of success. We are a California-based company familiar with PG&E’s programs and those offered by other third-party administrators. To date, Southland has secured over $35 million in rebates and incentives for various clients. We continually work closely with these programs and have the local experience and relationships needed to secure these funds as they become available. We continuously monitor the status of available incentives and rebate programs to provide the maximum possible benefit for our clients. Incentives and Credits for Consideration The Investment Tax Credit through the Inflation Reduction Act The ITC has been extended and modified through the IRA, allowing the City to take a 6% to 40% credit on qualified ECMs as payment from the IRS if the installing contractor meets the strict criteria. Southland has partnered with tax consultants and trained and expanded our staff to assist our clients in taking advantage of this opportunity. We are currently assisting clients in securing over $8 million in credits despite the new program only being fully defined in late 2023. Based on the estimated ECM selections and costs in this proposal, the anticipated tax credit value to the City is estimated at $295,000. 5 | FUNDING yOUR PROJECT 5 | FUNDING yOUR PROJECT With assistance from Southland the recently completed California Department of State Hospital - Coalinga project received $575K in custom utility incentives. The City of San Luis ObispoSouthland Industries 20 The City of San Luis ObispoSouthland Industries 21 5 | FUNDING yOUR PROJECT While a lot of ITC publicity cites the 30% credit, the base credit available for most projects is only 6%. To achieve the full 30%, installation contractors must adhere to very specific wage and apprenticeship rates. As a union contractor, Southland is best positioned to ensure these criteria are met by our union installation staff and subcontracting partners. Other firms that are not union contractors or do not have similarly developed apprenticeship programs may struggle to achieve the multiplier, reducing the base credit from 30% to 6%. The estimated ITC credit is based on the current IRA. During the IGA, Southland will work to define the solar array and battery storage size to determine the approved tax credit value should the IRA remain in effect. PG&E Measured Savings Program for Summer Reliability (MSSR) Commercial Program As an MSSR Aggregator, Southland’s team has extensive experience with the available incentive programs applicable to the City’s sites, such as the MSSR program. Our excellent reputation for obtaining incentives will facilitate faster approvals and early awareness as new programs come to market. Based on our partnerships with PG&E, Southland has confirmed with the third-party administrator, Alternative Energy Systems Consulting, Inc. (AESC), that the proposed ECMs at these sites are eligible to participate in the incentive programs offered in those localities. Current estimates indicate the City’s project is eligible for $325,000 incentives. The incentives are paid after the first year of M&V upon verification of savings at each utility meter (electric and gas) at each site. 5.2 PROJECT FINANCING Decarbonizing and electrifying energy infrastructure can be costly, and care must be taken to optimize both the capital and operating expenses of such an initiative. Electricity is more expensive than natural gas in terms of cost per equivalent energy unit, and simply replacing existing gas-fired systems with electrically-driven equivalents would result in both significant capital expense and higher energy costs unless the transition is carefully managed. Southland has completed an initial financial analysis of the project. We see an opportunity for the City to invest its own $1.5 million of “Lead by Example” (LBE) funds. Doing so leverages these funds towards their identified purpose and enhances the impact of the SST project. Together with the tax credits and incentives identified previously and additional annual contributions, the $6.9 million project can be financed in 18 years. There are many iterations of how the City may choose to leverage its capital and combine the RFP-identified and Southland-identified ECMs for the best financial outcome. For the scenario below, Southland has included all identified ECMs, as this combination eases the required capital buydown, shortens the loan term by three years, and provides the City with an additional $1.5 million of positive cash flow over the project’s life. We have modeled this scenario using a $750,000 i The Corp Yard building is eligible for an additional 10% ITC Low-Income credit bonus as shown in the National Renewable Energy Laboratory map. The City of San Luis ObispoSouthland Industries 22 5 | FUNDING yOUR PROJECT upfront capital contribution and small annual contributions toward debt service over the loan term. Leveraging City funds in this manner shortens the finance term by five years, reduces interest costs by $1 million, and yields a net positive cash flow of $2.6 million over the 25-year life of the project. Financing Scenario Years Annual Savings Incentives LBE Funds Capital Contribution Net Income Net Annual Cumulative 1 $82,323 $501,000 $165,000 $275,000 $127,690 2 $86,439 $176,000 $78,000 $291,700 $1,050,075 3 $90,761 $765,000 $0 $644,779 4 $95,299 $518,000 $0 $912,818 5 $100,064 $318,800 $923,208 6 $105,067 $328,400 $412,969 7 $110,321 $338,200 $421,117 8 $115,837 $348,400 $429,673 9 $121,629 $358,800 $438,657 10 $127,710 $369,600 $448,090 11 $134,095 $380,700 $457,994 12 $140,800 $392,100 $468,394 13 $147,840 $403,800 $479,314 14 $155,232 $416,000 $490,779 15 $162,994 $428,400 $502,818 16 $171,144 $441,300 $515,459 17 $179,701 $454,500 $528,732 18 $188,686 $468,200 $542,669 $139,946 $139,946 19 $198,120 $0 $307,302 $307,302 $447,249 20 $208,026 $0 $322,667 $322,667 $769,916 21 $218,427 $0 $338,801 $338,801 $1,108,717 22 $229,349 $0 $355,741 $355,741 $1,464,457 23 $240,816 $0 $373,528 $373,528 $1,837,985 24 $252,857 $0 $392,204 $392,204 $2,230,189 25 $265,500 $0 $411,814 $411,814 $2,642,003 Totals $2,473,361 $352,000 $1,526,000 $6,013,900 $12,297,292 $2,642,003 City of SLO - Traditional Tax Exempt Lease with Capital Contribution Project Cost $7,468,161 Capital Buydown $750,000 Interest Rate 3.75% Term 18 years During the IGA, these budgets will be further investigated for accuracy, along with the Capital Improvements Plan (CIP) Reserve’s availability and additional funds. In many cases, Southland’s clients choose to forgo project financing and directly fund the project with existing capital or budget allocations. In either case, Southland will provide whatever project financial information is necessary to support this decision. The City of San Luis ObispoSouthland Industries 23 5 | FUNDING yOUR PROJECT Additional Financing Opportunities Other financing iterations could include PG&E On-Bill Financing (OBF) programs and PPAs. In the case of the City’s project, it is also possible to blend capital contributions, traditional financing, and OBF loan programs. Under PG&E’s new OBF for renewable energies, portions of the City’s project will qualify for this program. Utility On-Bill Financing (OBF): The Energy Efficiency Retrofit Loan Program, also known as the On-Bill Financing, helps eligible customers pay for energy efficiency retrofit projects with zero interest and zero penalty loans. Southland, as an OBF Trade Pro Partner, can directly assist with all applications and funding requirements. The program provides up to $4 million for eligible projects, a 10-year term, and reimbursement after project completion. • Additional OBF Programs: OBF is expanding to include funding for battery storage and electric vehicle charging (the program opens in early 2025). The program limits funding to 30% of EV and battery storage costs. These costs are spread over the 10-year allowed term. In the event that the City does not fully fund this project and desires to explore project financing, Southland will proceed with the financing and lender evaluation by issuing a financing RFP. The RFP includes various options for payment structures and term lengths, fostering competition among potential lenders to secure the best overall rate. The process starts with milestone workshops held during the development of the IGA. These workshops provide the Finance Director and City stakeholders insights into expected upfront and lifecycle costs. Values are continuously refined throughout the IGA process, with updates provided at each milestone. Southland’s comprehensive financing strategy goes beyond mere cost reduction, ensuring that the City can implement sustainable energy solutions without compromising its financial well-being. Through meticulous planning, milestone workshops, and strategic financing options, Southland aims to empower the City to embrace decarbonization with confidence and fiscal prudence. 6.1 EXPERIENCE WITH SIMILAR CUSTOMERS, FACILITY TYPES, & RECOMMENDED MEASURES Over the past 75 years, Southland has completed thousands of design-build projects. Southland combines world-class energy engineering and project development with industry-leading design and construction practices, making us one of the nation’s top energy and design-build-maintain firms. Consistently one of Engineering New Record’s Top 5 specialty contractors, we have a diverse customer list of high-visibility projects demonstrating our ability to address critical infrastructure and energy needs. Applying these strengths to the City of SLO will result in a lower-risk and highly cost-effective project that maximizes savings and infrastructure improvement. Our experience is vast: over the last 20 years, Southland has completed 120 municipal projects in the State of California, totaling over $1.3 billion of contracted work. Southland’s energy expertise is extensive. We have completed or are in progress on major projects with dozens of federal, state, and municipal clients across the country. Recent and current state and municipal projects in California include Cambria Community Water District, the Department of State Hospitals (DSH)-Metropolitan, DSH-Coalinga, the City of San Luis Obispo, the City of Chico, the City of Santa Maria, the City of Union City, the City and County of San Francisco, the City of Newark, and Kern County. On the following pages, Southland provided summaries of projects relevant to the project proposed for the City of San Luis Obispo. 6 | PREvIOUS ExPERIENCE 6 | PREvIOUS ExPERIENCE City of SLO Southland Office SST Project Municipal Project 14SST Projects 120MunicipalProjects The City of San Luis ObispoSouthland Industries 24 CITY OF SAN LUIS OBISPO WATER TREATMENT PLANT UPGRADE CITY OF CHICO PHASES I & II IndustryMunicipal LocationSan Luis Obispo, CA Contract Value$14,000,000 OwnerCity of San Luis Obispo IndustryMunicipal LocationChico, CA Contract Value$13,300,000 OwnerCity of Chico In partnership with PG&E through the SST program, Southland completed a design-build retrofit project to upgrade critical, aging, and inefficient water treatment systems to improve reliability, energy efficiency, and resilience at the City’s water treatment plant. This project reduced energy and operation costs, addressed the replacement of obsolete critical equipment, and helped the City achieve its sustainability goals. ECMs implemented include ozone system replacement/upgrade, transfer pump station vFD and controls upgrades, plant service water pump system upgrade, and Supervisory Control and Data Acquisition (SCADA)/controls system replacement/upgrade. Southland developed a turnkey program for the City that included project development, design engineering, project implementation, commissioning, M&V services, project funding/financing, and incentive/ grant procurement. This bundled approach significantly reduced the project’s schedule, solved a funding shortfall, enabled the City to collaborate with the Southland team throughout the entire development and design process, and provided cost certainty. The City of Chico embraced decarbonization and electrification by upgrading HvAC and wastewater systems, reducing energy costs, and advancing towards net zero goals. Stakeholder engagement and phased implementation ensured success within financial constraints. This commitment to sustainability set the stage for collaboration with PG&E through the SST program, where Southland lead a comprehensive energy and infrastructure retrofit project. The goal was to reduce energy and operational costs, address deferred maintenance, and support the City in meeting its sustainability objectives outlined in the CAP. Phase I includes implementing new variable speed blowers at the wastewater treatment plant (WWTP) aeration ponds and upgrading and expanding City control systems. The project resulted in $234,992 annual savings, an 11% energy reduction at the WWTP, and a 16% energy reduction in city buildings. The project was funded through PG&E’s OBF and the City’s CIP funds. Phase II includes adding 2.2 MW of solar across three separate applications: 1 MW ground mount, 836 kW ground mount, utilizing PG&E’s renewable energy bill transfer credit (RESBCT), and an additional 138 kW carport application. Electrification of all HVAC systems across City buildings with heat pump units. The project is expected to generate 3,500,000 kWh and reduce utility costs by $660,000 annually. 6 | PREvIOUS ExPERIENCE 6.2 PROJECT EXPERIENCE The City of San Luis ObispoSouthland Industries 25 CITY OF SANTA MARIA DSH-METROPOLITAN IndustryMunicipal LocationSanta Maria, CA Contract Value$10,000,000 OwnerCity of Santa Maria IndustryState Healthcare LocationNorwalk, CA Contract Value$27,000,000 OwnerCalifornia Department of State Hospitals In partnership with PG&E, Southland is developing a holistic program to reduce energy consumption, optimize control of energy-consuming systems, and generate energy onsite from renewable sources for the City of Santa Maria. The project consists of three phases developed to pay for themselves through savings created. This effort supports the City’s cost savings and operational efficiency goals. Currently, Southland is implementing city-wide HVAC upgrades across 16 facilities. These upgrades include installing more efficient, reliable systems to reduce the City’s annual utility spending. This upgrade also includes implementing new control systems across 19 city buildings. Concurrently, Southland is installing LED lighting at the City’s sports field facilities. This upgrade will allow the sports fields to be used for recreational activities later in the evening. In addition to this current project phase, Southland previously implemented a new flare system and backup generation at the City’s landfill facility and upgraded the SCADA system at the wastewater treatment plant. Upcoming phases will include city-wide LED upgrades. First opened in 1916, DSH-Metropolitan is an 826-bed secure hospital that specializes in psychiatric care. Due to the facility’s age and ongoing budget constraints, DSH-Metropolitan was struggling with failing HVAC equipment, rising maintenance costs, and tenant comfort issues. Additionally, required, aggressive energy and carbon reduction goals were putting a significant financial strain on the hospital and impacting an already understaffed operations and maintenance team. The State’s Department of General Services (DGS) selected PG&E and Southland Industries to deliver a design-build energy retrofit project using PG&E’s SST program. The hospital’s challenges compromised its ability to reliably maintain acceptable indoor environment conditions and achieve its core mission. Southland’s scope of work includes retrofitting campus-wide indoor and outdoor lighting, replacing air handling units, modernizing steam distribution system, expanding the energy management control system, and replacing domestic water fixtures. The project will eliminate over 1,100-tons of carbon emissions annually. In addition to reducing the hospital’s carbon footprint, it is projected to reduce electrical consumption by 1.9M kWh/yr and will reduce utility and operational costs by over $1.2M annually. The project was funded using Special Reserve Funds and traditional financing. 6 | PREvIOUS ExPERIENCE The City of San Luis ObispoSouthland Industries 26 CITY OF UNION CITY CORRECTIONAL TRAINING FACILITY (CTF) IndustryMunicipal LocationUnion City, CA Contract Value$4,100,000 OwnerCity of Union City IndustryCorrections LocationSoledad, CA Contract Value$6,900,000 OwnerCalifornia Department of Corrections and Rehabilitation Southland provided turnkey design-build-maintain services, including detailed audits, engineering, design, implementation, and maintenance services for Union City’s multiple mixed-use facilities: fire stations, senior center, city hall, teen center, community center, and sports complex. The project includes solar PV rooftops and carports at five facility locations. The ESPC project will result in 20% annual utility savings. Union City has a commitment to creating a sustainable community. This project contributed to achieving the City CAP goal to reduce GHGs by 20% below 2005 levels by the year 2020. The project saves the city $260k annually in energy and maintenance costs and implements rooftop and carport solar Pv to generate clean energy. The Pv systems installed produce over 1 million kWh/yr. and generate 45% of the city’s electrical needs. The project provides a carbon footprint reduction of over 12,000 metric tons and a water reduction of over 1.3 million gallons per year through installing low-flow plumbing fixtures, delivering real-time analytics and monitoring, and expanding controls and pneumatic to Direct Digital Controls (DDC) conversions. Additionally, southland replaced existing boilers with new high-efficiency boilers to increase efficiency. The CTF facility houses 2,496 incarcerated people and is approximately 1.4 million SF in size. Now exceeding 70 years of age, CTF is in need of infrastructure improvements to maintain a safe environment and continue efficient facility operations. Southland is upgrading all exterior and common area lighting to operate with new LED technology while complying with AB2208 and stopping the purchasing of fluorescent components. Additionally, we are insulating steam and hot water piping, which will reduce natural gas usage and reduce GHG emissions. Furthermore, Southland developed a 1,000 kWh BESS system to be integrated into their existing renewable energy systems for a separate phase of work. Southland’s recommended project for CDCR and CTF addresses the efficient and safe operation of lighting and heating systems and advances CDCR’s commitment to zero net energy (ZNE). The selection of ECMs and our approach to ensure that each ECM provides long- term savings and infrastructure improvements and supports CDCR’s commitment to efficiently operate renewable energy sources for their ZNE goals. 6 | PREvIOUS ExPERIENCE The City of San Luis ObispoSouthland Industries 27 7.1 SAFETY Our in-house Safety Manager will develop and administer a safety program customized to ensure we are fully compliant with the City’s safety policies and procedures as well as PG&E’s Contractor Safety Requirements. No activities will be initiated until we complete our Safety Plan. Safety is one of our core values and is deeply embedded in our culture. This is demonstrated by our exceptional 2024 California Experience Modification Rate (EMR) of 0.58, ranking us in the top 5% of contractors in the nation. We take safety very seriously and incorporate it into every facet of our work. Safety, productivity, and quality are interdependent and equally important to project success. Our low EMR drives lower insurance premiums that reduce direct labor costs and help minimize project costs. Southland’s absolute goal is to provide the safest working environment possible for all our employees and subcontractors. 7.2 DIVERSITY We aspire to build a workforce that mirrors the diversity of the people in the buildings we design, build, and maintain. Our Diversity, Equity, Inclusion, and Belonging (DEIB), Supply Chain Management Plan and Minority and Small Businesses commitment is embedded in the Southland culture; • Southland recognizes the importance and benefits of utilizing Small Business Enterprises (SBE), Minority Owned, Women Owned, Service-Disabled Veterans (MWSDVBE), MDOT Certified, and local businesses in the performance of our contracts. • We maintain a nationwide database of over 10,000 subcontractors including 8,300+ Small / Disadvantaged Businesses in all socioeconomic categories that we have previously engaged on projects. For more information on our Supply Chain Responsibility and on our Diversity, Equity, Inclusion, and Belonging (DEIB) commitment please visit our website. • https://southlandind.com/culture/supply-chain-responsibility • https://southlandind.com/culture/diversity-equity-inclusion-belonging 7.3 SUSTAINABILITY Southland, is a leader in the green building movement, and upholds a broad commitment to sustainability throughout our business practices. We’ve continuously provided cost-effective, energy- efficient mechanical solutions for over 70 years. Recognizing the growing global concern for energy conservation savings and the large impact of reducing energy consumption in facilities, Southland focuses on energy service solutions and sustainability as one of our core offerings. In addition to helping our clients achieve their mission and reach their goals through construction delivery or energy performance, we focus on the efficient use of materials, prefabrication, and modular construction to reduce waste, waste management, efficient fleet vehicles, and have a Green Team in each of our locations. For more information please visit our website at: • https://southlandind.com/culture/sustainability-green-initiatives 7 | SAFETy, DIvERSITy, & SUSTAINABILITy 7 | SAFETy, DIvERSITy, & SUSTAINABILITy Southland achieved 27.5% small and diverse business utilization at the State of California New Natural Resources Headquarters building in Sacramento, CA. The City of San Luis ObispoSouthland Industries 28 8.1 TOTAL FIXED PRICE COST Based on the ECMs identified in the RFP and additional ECM opportunities, Southland proposes executing the project/IGA for the following costs: Summary Table of Project/IGA Costs 8.2 FINANCIAL SPREADSHEETS 8.2.1 Cost Questionnaire Refer to Southland’s Cost Questionnaire uploaded in Woods Mackenzie. 8.2.2 Labor Rates 8 | PRICING & RATES 8 | PRICING & RATES Project Cost Net Cost after Tax Credits and Incentives IGA Cost RFP Identified ECMs $6,981,424 $6,473,560 $0 Additional ECM Opportunities $446,471 $346,657 $0 Project Direct Labor Rates Direct Rate ($/ hr) Fringe ($/hr) Hourly Rate ($/ hr) Project Direct Labor Rates Direct Rate ($/ hr) Fringe ($/hr) Hourly Rate ($/ hr) Project Developer $101.26 $36.21 $137.48 Construction Period O&M Mgr.$88.90 $31.79 $120.69 Director of Project Development $110.48 $39.51 $149.99 Quality Control Manager $86.89 $31.07 $117.96 Solutions Developer $102.77 $36.75 $139.52 Commissioning Agent $72.52 $25.93 $98.45 Energy Engineer $75.12 $26.86 $101.98 Director of Construction $117.66 $42.07 $159.73 Principal Engineer $94.11 $33.65 $127.76 Construction Manager $86.89 $31.07 $117.96 Project Coordinator $47.88 $17.12 $65.00 BAS Technician $72.40 $25.89 $98.30 Project Manager $86.79 $31.04 $117.82 Fabrication Shop Labor $60.65 $21.69 $82.34 Project Executive $102.77 $36.75 $139.52 Sheetmetal General Foreman $69.92 $25.00 $94.92 Performance Assurance Mgr.$93.37 $33.39 $126.76 Sheetmetal Foreman $67.00 $23.96 $90.95 Safety Manager $79.19 $28.32 $107.50 Sheetmetal Journeyman $58.27 $20.84 $79.11 Design Engineer, Senior $90.51 $32.37 $122.88 Sheetmetal Apprentice $49.52 $17.71 $67.23 Design Engineer II $84.48 $30.21 $114.69 Plumber General Foreman $78.50 $28.07 $106.57 Design Engineer I $78.45 $28.05 $106.50 Plumber Foreman $72.33 $25.87 $98.20 Model Coordinator $87.01 $31.11 $118.12 Plumber Journeyman $63.09 $22.56 $85.65 BIM Support Specialist, Senior $90.51 $32.37 $122.88 Plumber Apprentice $50.89 $18.20 $69.08 BIM Support Specialist $78.45 $28.05 $106.50 The City of San Luis ObispoSouthland Industries 29 The City of San Luis ObispoSouthland Industries 30 8 | PRICING & RATES 8.3 PROFIT, OVERHEAD, & TOTAL MARK-UP The profit, overhead, and total markups to be used to develop the design-build, fixed cost estimates are as follows: Profit Overhead Total Mark-Up 4.5%13.5%18.0% 8.4 CLOSING Our proposal addresses the City’s immediate and future needs with an innovative suite of ECMs that interact to fix operational issues, meet or exceed standards for comfort and ventilation, dramatically reduce GHG emissions, and address the City’s goals for renewable energy. Southland has developed, designed, and installed many PG&E SST projects, including for the City of SLO, and is already familiar with City processes and procedures. Our local project manager will provide the City with close, consistent, and competent oversight of your projects, ensuring smooth and continuous operations of your buildings. We are committed to the success of this project to effectively facilitate the City’s commitment to reduce GHG emissions by 10% each year and successfully demonstrate your “Lead by Example” pillar of reaching carbon neutrality by 2030. This project is an exciting opportunity, and Southland would be honored to assist the City in achieving and maintaining a “Sustainable SLO.” To make it a reality, this project deserves the full attention of a knowledgeable, skilled, collaborative team, and Southland is eager to be part of that team. southlandind.com As an MEP building systems expert, Southland Industries provides integrated, full lifecycle solutions that optimize the design, construction, operation, and efficiency of buildings. Through collaborative partnerships with our clients and the collective expertise of our people, we create premier built environments and future-ready spaces where communities and businesses can thrive. ©2024 Southland Industries, all rights reserved.