City Council Agenda Report
November 7, 2023
TO: Honorable City Council
FROM: Jesus M. Gomez, City Manager
BY: Jana Stuard, Director of Finance
Christine Roberto, Public Services Manager
SUBJECT: PUBLIC HEARING - RESOLUTION NO. 23-68 – SUSTAINABILITY, ENERGY
EFFICIENCY AND INFRASTRUCTURE IMPROVEMENT PROJECT
Background:
For many years, City Council has supported energy efficiency upgrades to buildings and infrastructure. Staff have completed energy audits and implemented numerous energy efficiency projects to upgrade facilities which provide energy efficient buildings, a comfortable environment for visitors and staff, and overall cost savings for the City. Projects have included light-emitting diode (LED) lighting retrofits, upgrades to heating, ventilation, and air conditioning (HVAC) units, plumbing fixtures to save water, and a variety of other projects.
To build on these efforts, this City has been working with Syserco Energy Solutions (SES), a qualified energy services company, to identify energy conservation measures and renewable energy opportunities. SES has analyzed the City’s energy use data, surveyed the City’s facilities and equipment, modeled buildings for performance, identified opportunities to utilize resources more efficiently, developed energy conservation measures (ECMs), and calculated potential energy savings from the implementation of the proposed measures.
Energy conservation measures identified include the following:
Install solar panel arrays at several facilities
Install energy efficient “cool” roofs at Transportation/Public Services facility buildings Install building management system thermostats at several facilities Retrofit ballfield lighting at Holifield and Zimmerman parks to LED Install ballfield lighting at Lakeside and Ramona parks Replace HVAC units more than 18 years old
Refurbish all other HVAC units to provide protective polyurethane coating
City Council November 7, 2023
Resolution No. 23-68 – Sustainability, Energy
Efficiency and Infrastructure Improvement Project
Page No. 2
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1 Replace transformer at City Hall to a high efficiency unit Building exterior upgrades to add and/or replace door sweeps and sealing of doors California Government Code Section 4217.12 (CA 4217) provides that a public agency may enter into an energy services contract on such terms as the City Council determines are in the best interest of the City provided City Council conducts a public hearing and can make the following finding:
1. The anticipated cost to the City for energy or conservation services provided under the contract will be less than the anticipated marginal cost to the City of the energy that would have been consumed in the absence of these purchases.
2. That the difference, if any, between the fair rental value for the real property subject to the facility ground lease and the agreed rent, is anticipated to be offset by below-market energy purchases or other benefits provided under the energy service contract.
In other words, CA GC 4217 allows the City to directly engage a qualified energy services company in a design-build agreement provided that the energy cost savings that result from the agreement are greater than the cost of the improvements.
The proposed energy services contract with SES calculates that the total energy savings, over the expected useful life of the equipment is $39,458,180. These savings come from energy savings that result from more efficient equipment, savings from buying less electricity from Southern California Edison and instead generating electricity via on-site solar panels and operational savings from reduced maintenance of old equipment.
Staff is requesting that the City enter into a contract with SES for the sustainability, energy efficiency, and facility improvement project. Tax-exempt bond financing by private placement or public offering for the project will be secured and brought back to City Council for approval at a later date.
Fiscal Impact:
SES has provided a comprehensive report identifying all measures for the project, with a proposed cost of approximately $18,200,000. The solar panel array portion of the project is approximately $12,000,000 that will be financed. The City will fund the remaining $6,200,000.
The Fiscal Year 2023/24 budget already includes $1,935,000 appropriation for Park lighting improvements, the remaining $4,265,000 additional funding will be requested for approval at a later time: $2,200,000 from Proposition C and $2,065,000 from existing capital reserves.
Project cost per location and per various components is detailed in Attachment 3.
The City will solicit proposals for tax-exempt municipal lease financing of $12,000,000 that will cover the solar photovoltaic systems at six locations. In addition to the Investment Tax and Energy Community Tax credits estimated at $4,080,000, it is proposed that the energy cost City Council November 7, 2023
Resolution No. 23-68 – Sustainability, Energy
Efficiency and Infrastructure Improvement Project
Page No. 3
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1 savings be used to make financing payments. A pro forma model of the expected cash-flow from the Project is identified in the project proposal (Attachment 2). As noted, the Project is expected to produce positive cash-flow (savings in excess of financing service payments). Upon the conclusion of the lease payments, the savings generated over the remaining useful life of the equipment will add to the City’s savings in the absence of adopting these ECMs.
Citizens Advised:
The public hearing notice was posted at the City’s three designated posting places on October 24, 2023, and published in The Norwalk Patriot on October 27, 2023. As of the writing of this report, staff has received no public comments.
Strategic Plan 2023 Implementation:
The recommended actions will further the City’s Strategic Plan Goals 2, 3, and 4 to work in partnership with the community, re-invest in aging infrastructure; build great public destinations, maintain the City’s financial resiliency; and support sustainability and climate resilience.
Recommended Action:
Staff recommends City Council:
a. adopt Resolution No. 23-68, A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF NORWALK MAKING FINDINGS PURSUANT TO GOVERNMENT CODE SECTION 4217.12(A)(1)-(2) AND AUTHORIZING THE CITY MANAGER TO FINALIZE
NEGOTIATIONS THAT ARE IN THE BEST INTERESTS OF THE CITY FOR AN ENERGY SERVICES CONTRACT WITH SYSERCO ENERGY SOLUTIONS, INC. FOR THE ACQUISITION OF ENERGY CONSERVATION EQUIPMENT;
b. authorize the City Manager to begin the process to secure tax-exempt bond financing by private placement or public offering funding for the project; and c. authorize the City Manager to prepare, execute, or record (cause to be recorded) any documents required under the project, on behalf of the City, in a form approved by the City Attorney.
Attachments:
1. Resolution No. 23-68
2. Project Proposal
3. Cost Breakdown per Facility