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Annual Energy Cost Savings $1,012,459 Payback Period 12.6 years Financial Recommendations 1. Recommended financing timeline: Tanko Lighting recommends that the loan be secured and funds be available immediately upon CPUC approval of the acquisition. SCE has agreed that in 60 days the acquirable streetlight assets will be the property of the City. The 60 -day period can coincide with the purchase of the LED streetlight fixtures. This will enable the City to begin planning the installation as the fixtures are manufactured and shipped, therefore maximizing the City's time. Installation Strategy: • CPUCApproval • 60 days from approval to ownership o Procure materials o Prepare for installation o Issue Install Notice to Proceed (NTP) • Installation begins upon transfer of ownership to City 2. Recommended financing options: a. Private agency (municipal lease -purchase loan): In the absence of state-sponsored programs, municipal lease -purchase loans are most popular because they are stable when linked to energy efficiency projects. These loans use the streetlights as collateral rather than risking any additional City assets. If the City were to default on the loan, the streetlights are the only assets at risk. I. Suggested Private Agencies: 1. TCF Financial Corporation, Graybar Financial, Banc of America, Manufacturer based options (GE, Phillips, etc.). b. State-sponsored loan: State-sponsored loans have a substantially reduced financing rate of 1%. They cannot, however, be used for the acquisition costs and have a limit of $3 million. If the project changes significantly, the City would be required to resubmit the project for approval. This model also separates the acquisition costs from the conversion costs, resulting in a higher interest rate for the acquisition financing. i. Available state-sponsored loan: 1. California Energy Commission loan 3. Things to consider: The assumptions in the Financial Analysis are a conservative estimation. As a result, the loan amount that the City will be requesting may be reduced once a final offer is issued. Because of this, the interest rate may increase to accommodate the lower project cost. Regardless, at the end of the project, the City will be still be cash flow positive and will save $3.3 million over the next 20 years after loan payments. QA,MV TankoLighting www.tankolighting.com 1220 Bayshore BJ5 r{AAf:FA 94124 1 P415.254.7579 I F415.822.3626