DATE: April 1, 2025
TO: Mayor and City Council
FROM: Director of Maintenance Services
SUBJECT: Adopt a Resolution Authorizing the City Manager to Execute an Agreement with Syserco Energy Solutions, Inc., for Energy Conservation Measures Reimbursable under Pacific Gas & Electric’s (PG&E) On-Bill Financing Program, in an Amount Not-to-Exceed $2,196,973 and Transfer and Appropriate $2,087,504 from the Measure C Fund to the Facilities Capital Improvement Fund, Project 07235
RECOMMENDATION
That the City Council adopts a resolution (Attachment II) authorizing the City Manager to execute an agreement with Syserco Energy Solutions, Inc., for Energy Conservation Measure, pursuant to California Government Code Section 4217.10, which will be fully reimbursed by PG&E once construction is complete under their On-Bill Financing Program, in an amount not- to-exceed $2,196,973, including the appropriation and transfer of $2,087,504 from the Measure C Fund to the Facilities Capital Improvement Fund Project 07235.
SUMMARY AND BACKGROUND
To achieve cost savings and sustainability goals, staff is proposing several energy-efficiency improvements and carbon footprint reduction strategies. The project would include various Energy Conservation Measures (ECMs) across 16 City facilities financed through PG&E’s On- Bill Financing (OBF) program. OBF allows end-users to make energy savings improvements, where the cost of the improvements are fully offset by the resulting energy savings each month, over a period up to 10 years. This allows users to perform energy savings measures, paid for by the realized energy savings, with no increase in their PG&E bill, typically with a minimal capital outlay required. Cost savings would be realized with energy savings as well as an extended usable life of capital assets such as HVAC units.
DISCUSSION
In January 2023, the City of Hayward (City) engaged with Syserco Energy Solutions, Inc., (SES) to perform an audit of City facilities. Information from the audit was used to create a list of
ECMs that could be implemented and financed through PG&E’s On-Bill Financing (OBF) program. During the audit, five types of ECMs were identified by staff as the most viable and beneficial. City staff and SES worked together closely to identify the facilities that would benefit from the implementation of the various ECMs and then worked to finalize the project scope of work, costs, and energy savings for an application to PG&E for approval of OBF funding. Following review and verification of projected savings by a third-party professional engineering firm, PG&E approved the final project details in February 2025.
The primary goals of this project are:
1. Reduce energy consumption across City owned infrastructure
2. Reduce the City’s ongoing utility and operational costs
3. Reduce overall City greenhouse gas emissions
4. Upgrade aging infrastructure by improving efficiencies of existing equipment and systems
The following ECMs are proposed:
1. Building Management System (BMS) Retro commissioning - HVAC controls will be upgraded and optimized to improve operation of equipment and systems, resulting in lower energy use and improved functionality.
2. HVAC Refurbishment – HVAC units will have fins/coils combed and straightened and receive a surface treatment to improve efficiency and extend the life for these critical components.
3. Backup Generator Heat Pump Installation – Large generators typically use electrical resistance heating elements to keep the engines warm, so they are always ready to start. An electric heat pump, which is much more efficient than electric resistance, will be installed to warm four generators.
4. Lighting Upgrades – On January 1, 2025, AB 2208 banned the sale of non-LED lighting to public agencies throughout California. This measure will retrofit the majority of existing fluorescent lights across City facilities to LED lighting, resulting in improved lighting, energy reduction, and ongoing operational savings.
5. Window Film Installation – Window film will be installed on City Hall windows that receive direct solar impact, resulting in lower heat transfer through the windows, improved comfort, and reduction of energy use.
Key Project Benefits:
First year energy savings of approximately $250,000 (see Table 1). Total energy cost savings of approximately $3.3M over a period of 15 years and $6.2M over 20 years.
Annual carbon offset exceeding 169 metric tons of CO2 per year (see Table 2). Replacement and/or upgrade of important systems that have reached the end of their useful economic life.
Table 1. Project cost and first year savings by City facility Site Name
Electric Savings Gas Savings
Total Savings ($/yr)
ECM
($/yr) ($/yr) Price ($)
CITY HALL $87,725 $7,068 $94,793 $959,963
ANIMAL CONTROL & FACILITIES
MANAGEMENT $30,244 ($74) $30,170 $158,109
MANAGEMENT $7,905 $0 $7,905 $68,463
WATER DISTRIBUTION & STREET
MAINTENANCE $7,582 $0 $7,582 $27,723
UTILITIES DIVISION $9,566 $0 $9,566 $78,162
FIRE STATION 1 $16,310 $0 $16,310 $137,800
FIRE STATION 2 $457 $0 $457 $3,861
FIRE STATION 3 $227 $0 $227 $1,914
FIRE STATION 4 $301 $0 $301 $2,540
FIRE STATION 5 $428 $0 $428 $3,613
FIRE STATION 7 $16,241 $1,200 $17,441 $166,205
WEEKES BRANCH LIBRARY $13,311 $1,341 $14,651 $90,707 CINEMA PLACE PARKING GARAGE $14,263 $0 $14,263 $114,850 CITY HALL PARKING GARAGE $0 $0 $0 $116,858
HAYWARD POLICE DEPARTMENT $28,491 $4,660 $33,151 $243,973
HAYWARD POLICE NORTH
RESOURCE CENTER $3,719 ($30) $3,690 $22,234
Total $236,770 $14,165 $250,935 $2,196,973
Table 2. Energy and Emissions Savings by ECM Category
ECM # ECM Description
Electric Savings Gas Savings Total Savings
($/yr)
ECM
($/yr) ($/yr) Price ($)
3.06 BMS Retro-Commissioning $41,480 $16,470 $57,950 $308,088
4.02 Package Equip Rejuvenation $157,276 ($2,305) $154,971 $1,452,109
5.01 Building Lighting Upgrade &
Controls $41,480 $16,470 $57,950 $308,088
6.02 Window Film Installation $11,880 $0 $11,880 $110,854
16.06 E-Gen Heat Pump Heater $17,193 $0 $17,193 $226,760 Total $236,770 $14,165 $250,935 $2,196,973
Single Source Procurement – The proposed project with described above, is a single source procurement. Staff recommends that the City utilize California Government Code Section 4217.10, which allows for the expedited procurement of energy conservation projects by municipal agencies as long as the energy project is determined to provide financial savings over the operating lifetime.
Specifically, Code Section 4217.10 et seq1 authorizes public agencies to enter into an energy service contract without competitive bidding, provided that there is a two-week public notice before the authorization of the procurement and the cost of the conservation services provided by an energy conservation facility will be less than the anticipated marginal cost of energy that would have been consumed in the absence of the project.
Code Section 4217.10 allows the City to select an energy services partner, based on the best overall value to the City. SES is on the Department of Energy’s qualified list of Energy Service Company (ESCOs) for energy projects throughout the state and has demonstrated experience and expertise as it pertains to these projects.
SES has performed work for other cities and municipalities under Government Code 4217, including the City of Mountain View, City of Gilroy, City of Morgan Hill and the Hayward Area Recreation and Parks District. Staff checked references and received positive feedback about SES’ project deliverables. Syserco, Inc. is also the proprietary service provider of the Alerton HVAC control systems, currently utilized in multiple City-owned facilities. City staff believes that using Government Code Section 4217 is the best option for the City to implement these energy saving measures.
https://leginfo.legislature.ca.gov/faces/codes_displayText.xhtml?lawCode=GOV&division=5.&title=1.&part=&ch apter=3.2.&article
ECONOMIC IMPACT
The proposed project will have minimal impacts to the local economy.
FISCAL IMPACT
The project scope has been approved for OBF funding in the amount of $2,087,504, which is 95% of the total project cost of $2,196,973. The difference of $109,469 will be paid by the City. The City will pay the total project cost ($2,196,973) via construction progress payments, spread out over the course of the 12-month construction period. Upon completion of the project, PG&E will reimburse the City. The City will then repay PG&E using the realized energy savings on its utility bills over the following 10 years. This project has a total energy cost savings of approximately $3.3M over the first 15-years and $6.2M over 20-years.
This project construction is recommended to be funded by Facilities CIP through a Measure C Fund transfer. The adopted FY 24-25 CIP budget appropriated $109,469 to this project in the Facilities Capital Fund (Fund 726). Staff is requesting a transfer and appropriation from the Measure C Fund to the Facilities Capital Fund in the amount of $2,087,504 to fully fund the contract; at the conclusion of the project’s construction period (estimated at 12 months) this amount will be fully reimbursed.
ENERGY CONSERVATION
Measure C Fund Transfer to Facilities Capital Fund
Project #07235
$2,087,504
Previously Appropriated in FY 24-25 $ 109,469
Project Total $2,196,973
SUSTAINABILITY FEATURES
The City of Hayward is committed to developing projects that are environmentally responsible. Therefore, staff will ensure that the work scope proposed by the contractor incorporates features that are in line with the City’s sustainability guidelines.
STRATEGIC ROADMAP
This agenda item supports the Strategic Priority to Champion Climate Resilience & Environmental Justice but is not related to implementation of a specific project.
ENVIRONMENTAL REVIEW
The proposed project is categorically exempt from environmental review in accordance with the California Environmental Quality Act (CEQA) pursuant to Section 15301, Class 1 (Minor Alteration of Existing Facilities), of the CEQA Guidelines.
PUBLIC CONTACT
Agencies utilizing the procurement process allowed by California Government Code Section 4217.10 requires the City to hold a public hearing that is posted two weeks in advance. A public hearing notice was published in the Daily Review c/o Bay Area News Group-East Bay on March 14, 2025.
NEXT STEPS
If this item is approved, the City Manager will execute the contract with Syserco Energy Solutions Inc., for a not-to-exceed amount of $2,196,973 to support Project 07235 and staff will transfer and appropriate $2,087,504 from the Measure C Fund to the Facilities Capital Fund.
Prepared by: Liz Moran, Management Analyst II
Recommended by: Todd Rullman, Director of Maintenance Services
Approved by:
_________________________________
Dr. Ana M. Alvarez, City Manager