22A - SPEC - HVAC CHILLER AND WATER PUMP

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Contract Award to Install LED Lights and HVAC Chilled Water Pump and Agreement for On -Bill Financing Loan October 4, 2016 Page 2 HVAC equipment. Funding applications for the Corporate Yard and Police Administration are currently being reviewed by SCE. At this juncture, staff requests Council approve the implementation of the Main Library project as the first of three library retrofit projects. The other two retrofit projects with approved SCE funding are for Newhope Library and McFadden Learning Center, which will be presented to Council on November 15, 2016. The Main Library project consists of a lighting component (replace fluorescent lights with energy - efficient light- emitting diode [LED] lights) and a mechanical component (install new chilled water pump with variable speed drive in the HVAC system). Project benefits include an annual reduction of 164,767 kWh in energy usage, annual utility bill savings of $20,431 and annual greenhouse gas reduction equivalent to taking 291 cars off the road as tabulated below. Total project cost is $186,538 including a $7,150 contingency. Payback period is 8.5 years. As tabulated above, project cost will be fully funded by SCE using cash incentives of $33,889 and a zero interest On -Bill Financing (OBF) loan of $152,649 for a total of $186,538. An innovative feature of the recommended actions is the City will have no upfront costs as the awarded contractor will finance the cost of the project. SCE will then pay contractor directly with the cash incentives and OBF loan proceeds that SCE has approved for the project. As a result of the OBF loan, the Main Library's new electricity bill will be different as it will have a lower Amount Due based on the energy reduction from the project, and a new separate line -item to show the OBF loan repayment amount. This latter amount will reflect kWh saved from the project multiplied by the relevant billing rate. Once the OBF loan is paid in full, SCE will discontinue the OBF loan repayment line -item, and the reduced energy usage due to the project should result in smaller bills. (Cash incentives are grants and not repaid.) Staff requests Council approval of the foregoing project and funding process. SCE Notice of cash incentives and OBF loan amount approved for the project is attached (Exhibit 1). The Notice soliciting bids was advertised on August 16, 2016 on the City's online bid management and publication system. A summary of the bids received is as follows: 22A -2 EstiinaYed Estimated Estimated Estimated PR OJECT Aringal kWh ; bnnusl Utihr Bill Annuah ' SCE Gash Estimated CbIIAPQNENTS� ' SA�(IN(3S SAUIN�3 CAR off Incenfaves OBF -the R at1,', , Lighting 139,720 $17,325 236 $33,590 $134,824 Mechanical 25,047 $3,106 55 $299 $17,825 V u 11, b $3 _ Total project cost is $186,538 including a $7,150 contingency. Payback period is 8.5 years. As tabulated above, project cost will be fully funded by SCE using cash incentives of $33,889 and a zero interest On -Bill Financing (OBF) loan of $152,649 for a total of $186,538. An innovative feature of the recommended actions is the City will have no upfront costs as the awarded contractor will finance the cost of the project. SCE will then pay contractor directly with the cash incentives and OBF loan proceeds that SCE has approved for the project. As a result of the OBF loan, the Main Library's new electricity bill will be different as it will have a lower Amount Due based on the energy reduction from the project, and a new separate line -item to show the OBF loan repayment amount. This latter amount will reflect kWh saved from the project multiplied by the relevant billing rate. Once the OBF loan is paid in full, SCE will discontinue the OBF loan repayment line -item, and the reduced energy usage due to the project should result in smaller bills. (Cash incentives are grants and not repaid.) Staff requests Council approval of the foregoing project and funding process. SCE Notice of cash incentives and OBF loan amount approved for the project is attached (Exhibit 1). The Notice soliciting bids was advertised on August 16, 2016 on the City's online bid management and publication system. A summary of the bids received is as follows: 22A -2