25S - AGMT ON-BILL FINANCING LOAN

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Contract Award to Install LED Lights and Controls PD Administration Building, On -Bill Financing December 18, 2018 Page 2 completed this December. The contract agreement for the Ross Annex Parking Garage lighting retrofit is currently being executed, and the project will commence in early 2019. City Council gave authorization to proceed with the Police Administration building lighting retrofit project on September 4, 2018. An agreement for a not -to -exceed amount of $656,847 was executed with Marketing Power Inc. dba Energy Retrofit Co. However, as staff, the energy consultants, and the contractor reviewed locations and the proposed replacement fixtures, it was agreed that different lighting fixtures would look cleaner and improve illumination. Additionally, after installation of the new fixtures had begun, there were adjacent areas in the building that required additional lighting upgrades to provide both a consistent appearance and improved lighting. These authorized changes by City staff have amended the total project cost to $702,382. Staff recommends approval of the increased amount, as the additional fixtures will enhance overall energy savings and illumination of the facility. On September 4, 2018, City Council also authorized execution of a funding agreement with SCE for On -Bill Financing (OBF). The SCE OBF program provides interest-free funding for qualified energy efficiency projects and includes convenient repayment through the monthly SCE utility bill. The City has no upfront costs. SCE pays the contractor (Energy Retrofit Co.) directly from the OBF funding and with cash incentives, which are grants that do not require repayment. Once the total OBF amount is paid in full (maximum 10 years), SCE will discontinue the OBF charges on the utility bill. The SCE funding agreement for the Police Department Administration Building Lighting Retrofit project approved $526,499 in OBF funding and $115,348 in incentives, for a total of $641,847. Once the retrofits are completed, the Police Department will realize energy savings through lower monthly charges on their electricity bill. This energy savings will be utilized to pay the OBF and will be reflected as a separate line item on their utility bill. Once the total OBF amount is paid in full (maximum 10 years), SCE will discontinue the OBF charges. Upon project completion by Energy Retrofit Co., SCE will conduct an installation inspection report, including recalculations of overall energy savings from the enhanced project scope. It is expected that the revised energy savings will benefit the City by increasing SCE's incentives and/or increasing the approved OBF funding for the project. However, should SCE determine that the incentives remain unchanged, the OBF amount would increase to $587,034. Staff requests the City Council to approve the increase in OBF funding with SCE in an amount not to exceed $587,034, at which time the agreement will be provided by SCE. STRATEGIC PLAN ALIGNMENT Approval of this item supports City efforts to meet Strategic Plan Goal #4 — City Financial Stability, Objective 3 (achieve a structurally balanced budget) Strategy D (explore innovative revenue and cost recovery strategies) and Goal #6 — Community Facilities & Infrastructure, Objective 2 (address deferred maintenance on City buildings and equipment) Strategy A (prepare a Deferred Maintenance Plan that assesses safety, adequacy, and liability implications, and estimates repair costs to be programmed in the responsible agency's future budget). 25S-2