Public Works and Transportation Committee
April 9, 2024
AGENDA REPORT
TO: Jestin D. Johnson FROM: Joe DeVries
City Administrator Deputy City
Administrator/Chief
Resilience Officer
SUBJECT: Amendment of Enovity’s Contract to
Access California Energy Commission
Funding for Repairs to Oakland Ice
Center
DATE: March 7, 2024
City Administrator Approval Date:
RECOMMENDATION
Staff Recommends City Council Adopt A Resolution Authorizing The City Administrator To 1) Amend The City Of Oakland’s Contract With Enovity Inc. To Include The California Energy Commission's Energy Conservation Assistance Act Low-interest Loan Program; 2) Execute A 20-year Loan Agreement For A Low- interest Loan In An Amount Not To Exceed Three Million Dollars ($3,000,000) To Address Critical Repairs At The Oakland Ice Center; And 3) Accept And Appropriate A Federal Investment Tax Credit Direct Payment In An Amount Not To Exceed Four Hundred Fifty Seven Thousand Six Hundred Eighty Dollars ($457,680); And Authorizing Biannual Payments In An Amount Not To Exceed Eighty-three Thousand One Hundred Twenty-three Dollars ($83,123) Over The Life Of The Loan
EXECUTIVE SUMMARY
Approval of the proposed resolution will authorize the City Administrator to approve an amendment to Enovity’s existing contract (Attachment A) with the City of Oakland (City) that will allow the City to access the California Energy Commission’s (CEC) Energy Conservation Assistance Act (ECCA) Low Interest Loan program to facilitate critical repairs, energy efficiency improvements, and the installation of additional solar panels at the Oakland Ice Center (Ice Center).
Jestin Johnson (Mar 26, 2024 08:59 PDT)
Mar 26, 2024
Jestin Johnson, City Administrator
Subject: Amendment of Enovity’s Contract to Access California Energy Commission Funding for Repairs to Oakland Ice Center
Date: March 7, 2024 Page 2
2 BACKGROUND/LEGISLATIVE HISTORY
The Ice Center is a City-owned recreational facility located at 519 18th Street in the Uptown area of downtown Oakland. It is a multipurpose ice-skating facility with two ice rinks offering a variety of recreational activities including ice hockey, figure skating, broomball, curling, speed skating, ice dancing and public skating. Sharks Ice, LLC operates the facility for the City pursuant to a Management Agreement amended and extended pursuant to Resolution 86850.
The Ice Center’s current refrigeration system, which makes and maintains the ice on the rinks, utilizes the refrigerant R-22, a greenhouse gas now banned by the U.S. Environmental Protection Agency. On-going operation of the Ice Center will require that the City replace this refrigeration system. Resolution 86850 appropriated $3.8 million in redevelopment bond funds, to be repaid from Ice Center revenues, for this purpose but the cost of replacing the system is estimated to be approximately $10 million. The recommended action would allow the City to pursue CEC funds to help make up the difference.
The CEC’s ECCA program offers one-percent interest rate loans to public entities to finance the up-front costs of energy efficiency and energy generation projects, energy storage systems, and electric vehicle charging infrastructure. The maximum loan amount under the program is $3 million and loans must be repaid from energy cost savings within 20 years. City staff recommends using this program to expand the solar system on the Ice Center’s roof and provide funding towards replacement of its outdated refrigeration system at no net cost to the City. Staff has determined that this program is the best candidate to deliver the funding required to replace the Ice Center’s refrigeration system.
Enovity Inc., a Veolia Company, has served as an energy project developer for the City of Oakland under Pacific Gas and Electric’s (PG&E) On-Bill Financing (OBF) program since 2012, implementing dozens of turnkey lighting energy efficiency projects at municipal buildings at no cost to the City. On May 15, 2018, City Council approved Resolution No 87184 C.M.S., authorizing the City to participate in the OBF program and the City Administrator to enter PG&E OBF agreements. OBF allows PG&E to incur the up-front costs of the energy efficiency upgrades, which the City then repays on its utility bill as a zero percent interest loan. An amendment to Enovity’s contract would provide access to funding through the ECCA program and keep all other provisions in the contract the same.
Enovity would submit the application to the ECCA on behalf of the City and manage construction. ECCA funds would be administered by the CEC via progress payments to Enovity during construction. There would be no direct transfer of funds from the CEC to the City.
Payment by the CEC to Enovity would occur after City staff verifies progress made on the project. The City would make biannual payments on the loan of $83,123. This amount is projected to be covered by the energy cost savings generated by the project as shown in Attachment B. Staff would track actual energy cost savings to verify that there is no net cost to the City.
Jestin Johnson, City Administrator
Subject: Amendment of Enovity’s Contract to Access California Energy Commission Funding for Repairs to Oakland Ice Center
Date: March 7, 2024 Page 3
3 The City would receive a Direct Payment of $457,680 upon completion of the project through the federal government's Clean Energy Production Tax Credit, part of the Inflation Reduction Act.
ANALYSIS AND POLICY ALTERNATIVES
The CEC’s ECCA loan program would generate up to $3,000,000 in up-front funding for repairs to the Ice Center for improvements that may include retrofitting or replacing interior/exterior lighting, new lighting controls, replacing/upgrading refrigeration and HVAC equipment, replacing gas equipment with electric, enlarging its solar system and installing a battery energy storage system. The energy related improvements will be funded by utilizing the CEC ECCA program, which allows the City to repay the loan over 20 years. Costs of the loan will be covered by energy savings related to equipment upgrades and the expanded solar system. Funding through the CEC program will be coordinated by Enovity. Additional funding from the City will not be required for these improvements. Staff will return to Council with a plan for funding the remaining cost of the refrigeration system.
There is no alternative funding identified for this project. The City could choose not to make these repairs but that would result in the eventual closure of the Ice Center.
Providing a functional, energy efficient, and solar-powered Oakland Ice Center supports the Citywide Priority of Vibrant Sustainable Infrastructure.
FISCAL IMPACT
The amendment of Enovity’s contract to allow access to CEC ECCA funds will have a positive fiscal impact to the City. By using this funding mechanism and a turnkey project developer, the City will be able to keep the Ice Center open and functional without affecting the City’s General Fund. Upon completion of the project through the federal government's Clean Energy Production Tax Credit, a part of the Inflation Reduction Act, the City will receive a direct payment in the amount of $457,680. These funds will be deposited and appropriated in a Fund to be determined, Sustainability and Energy Group Org (02161), and in a Project to be determined. This Fund will also be used to make payments on the loan.
PUBLIC OUTREACH / INTEREST
No direct public outreach was conducted in the completion of this report.
COORDINATION
Jestin Johnson, City Administrator
Subject: Amendment of Enovity’s Contract to Access California Energy Commission Funding for Repairs to Oakland Ice Center
Date: March 7, 2024 Page 4
4 Staff from the City Administrator’s Office’s Sustainability and Resilience Division and Oakland’s Real Estate Division coordinated on the use of funding from energy savings, improvements to the Ice Center solar system, and repairs to the refrigeration system at the Oakland Ice Center.
This report, resolution and agreement was reviewed by the City Attorney and Finance Department Budget Bureau.
SUSTAINABLE OPPORTUNITIES
Economic: Facilitating access to CEC funding is the most cost-effective strategy to provide critical repairs to the Oakland Ice Center. These critical repairs will allow the Oakland Ice Center to stay in operation, bringing additional foot traffic to Oakland’s downtown area that supports other local businesses.
Environmental: The replacement of the Ice Center’s current refrigeration unit with a modern, energy-efficient model will decrease greenhouse gas emissions and pollution. The addition of solar panels to the Ice Center’s roof will lower the City’s greenhouse gas emissions by generating renewable energy.
Race & Equity: The Oakland Ice Center provides a place for recreation for Oakland’s underserved and underrepresented communities. It is the only space for many Oaklanders to access ice skating, ice hockey and related activities.
Jestin Johnson, City Administrator
Subject: Amendment of Enovity’s Contract to Access California Energy Commission Funding for Repairs to Oakland Ice Center
Date: March 7, 2024 Page 5
5 ACTION REQUESTED OF CITY COUNCIL
Staff Recommends City Council Adopt A Resolution Authorizing The City Administrator To 1) Amend The City Of Oakland’s Contract With Enovity Inc. To Include The California Energy Commission's Energy Conservation Assistance Act Low-interest Loan Program; 2) Execute A 20-year Loan Agreement For A Low-interest Loan In An Amount Not To Exceed Three Million Dollars ($3,000,000) To Address Critical Repairs At The Oakland Ice Center; And 3) Accept And Appropriate A Federal Investment Tax Credit Direct Payment In An Amount Not To Exceed Four Hundred Fifty Seven Thousand Six Hundred Eighty Dollars ($457,680); And Authorizing Biannual Payments In An Amount Not To Exceed Eighty-three Thousand One Hundred Twenty-three Dollars ($83,123) Over The Life Of The Loan
For questions regarding this report, please contact Nick Kordesch , Energy Program Manager, at (510) 238-6266.
Respectfully submitted,
Daniel Hamilton
Sustainability and Resilience Director, City
Administrator’s Office
Prepared by:
Nick Kordesch, Energy Program Manager, City
Administrator's Office
Attachments (2):
A: Amendment to Enovity Contract
B. Scope of work and financial analysis of Oakland Ice Center solar and energy efficiency project
AMENDMENT NO. 2
TO THE AGREEMENT
Whereas this Amendment dated February 12, 2024 amends the original agreement dated September, 1, 2018, by and between the City of Oakland, a municipal corporation (hereinafter “City”), and Enovity, Inc. (hereinafter “Consultant”), for Project # 1000927B City of Oakland Energy Efficiency Projects using PG&E On-Bill Financing and the CEC Energy Conservation Assistance Act – Low-Interest Loans Group #3 (A29) . Now, therefore, it is mutually understood and agreed by and between the undersigned parties that the Agreement is amended as follows:
1. Section 1 Compensation is amended as follows:
The estimated total value of the Project, inclusive of labor and materials, is Three Million Dollars 00/100 ($3,000,000.00) for Group #3 locations. No other changes are being made to existing billing or payment terms.
2. Period of Performance is amended as follows:
The period of performance of the agreement is extended from September 1, 2022 to January 31, 2026.
3. Scope of Services is amended as follows: Consultant agrees to continue to provide services required in the original contract and those described in the attached Exhibits. • Exhibit A – Location Map
• Exhibit B - Scope of Services
• Exhibit C – Project Schedule
• Exhibit D – Insurance Requirements
4. Minimum Wage Ordinance Oakland employers are subject to Oakland’s Minimum Wage Law whereby Oakland employees must be paid the current minimum wage. Employers must notify employees of the annually adjusted rates by each December 15th and prominently display notices at the job site. The law requires paid sick leave for employees and payment of service charges collected for their services. For further information, please refer to:
http://www2.oaklandnet.com/Government/o/CityAdministration/d/MinimumWage/OAK051451
5. Sanctuary City Contracting and Investment Ordinance (Schedule I) Ordinance N.O. 13540 CMS was adopted by the Oakland City Council on June 4th, 2019 and prohibits the City from contracting with any person or entity that provides the United States Immigration and Customs Enforcement (ICE) services or goods for data collection or with the United States Customs and Border Protection (CBP) Customs and Border Protection (CBP), or the Department of Health and Human Services Office of Refugee Resettlement (HHS/ORR) to support immigration detention facilities. These contractors are not to be used unless the City Council makes a specific determination that no reasonable alternative exists.
The ordinance also prohibits the City from investing in any of these companies and requires 1 | P a g e o f 3
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the City to include notice of these prohibitions in any Requests for Proposals (RFPs), Requests for Qualifications (RFQs), and any construction or other contracting bids. The ordinance also requires that the City provide an annual report to the Privacy Advisory Commission on its enforcement.
6. Section 25 Living Wage Adjustments (Schedule N) is amended as follows:
Minimum compensation - Effective July 1, 2021 through June 30, 2022, the minimum compensation for Consultant’s employees who perform services under or related to this amendment is the hourly wage rate of $15.30 with health benefits or $17.56 without health benefits.
Health Benefits - Said full-time and part -time employees paid at the lower living wage rate shall be provided health benefits of at least $2.26 per hour. Consultant shall provide proof that health benefits are in effect for those employees no later than 30 days after execution of the contract or receipt of City financial assistance.
7. Border Wall Prohibition (Schedule W)
This contract is subject to the Border Wall Ordinance of Oakland Municipal Code Ordinance 13459 C.M.S. The ordinance mandates and directs the City Administrator, when there is no significant additional cost (to be defined in regulations) or conflict with law, to refrain from entering into new or amended contracts to purchase professional, technical, scienti fic or financial services, goods, construction labor and materials or other services, or supplies from businesses that enter into contracts to provide su ch services, goods, materials or supplies to build the U.S. - Mexico border wall.
The City of Oakland shall be prohibited from entering into any contractual agreement for the purchase of services, goods, equipment, cyber network or cloud computing, internet, or cloud- based computer technology or services with any "BORDER WALL ENTITY" individual, firm, or financial institution who provides any services, goods, equipment, or information technology or cloud-based technology or services, to construct any part of the U.S. - Mexico border wall.
All other terms and conditions of the original agreement, except for those modified by this Amendment, shall remain unchanged and in full force and effect.
ENOVITY INC. DEPARTMENT DIRECTOR
Tim Chin Date
Sr. Vice President
Approved as to form and legality:
Office of the City Attorney Date
Public Works Department Date
CITY OF OAKLAND
(a municipal corporation)
Office of the City Administrator Date
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City Council Resolution No. 87184
Oakland Business Tax Certificate No. 00188433
Contract Purchase Order No.
DIR Project ID No. NA
EXHIBIT A – PROJECT LOCATIONS
EXHIBIT B – SCOPE OF WORK
EXHIBIT C – PRELIMINARY PROJECT SCHEDULE
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EXHIBITA–ProjectLocations(LocationA29)OaklandIceCenter51918thSt,Oakland,CA94612
EXHIBITB–ScopeofWork
ImplementenergyrelatedimprovementsthroughouttheOaklandIceCenter(OIC).Energyrelatedimprovementsinclude,butarenotlimitedto;retrofittingorreplacinginterior/exteriorlighting,newlightingcontrols,replacing/upgradingrefrigerationandHVACequipment,replacinggasequipment(electrification),upgradingsolarPVandinstallingabatteryenergystoragesystem.TheenergyrelatedimprovementswillbefundedbyutilizingPG&E'sOn-BillFinancing(OBF)Programand/ortheCECEnergyConservationAssistanceAct–Low-InterestLoanProgram.FundingthroughtheseprogramswillbecoordinatedbyEnovity. AdditionalfundingfromtheCitywillnotberequiredbutcanbeincorporatedintotheprojectifrequestedbytheCity. ThefacilityincludedinthescopeofworkistheOaklandIceCenter(OIC)locatedat51918thSt,Oakland,CA94612.RESPONSIBILITIESOF
ENOVITY
FundingPre-Approval1. EnovitywillworkwiththeCitytoclarifythevariousfundingsourcesavailable,reviewtheprosandconsofeach,andidentifypotentiallyviablefundingpathwaysfortheProject.2. EnovitywillworkwiththeCitytocompilefundingdocumentationforsignature,submitthedocumentationtothechosenfundingsource(s),andfollowuponthefundingapprovalprocess.Initial SiteAssessment (ISA)3. EnovitywillworkwiththeCitytoidentify, evaluate,performpreliminarydesignwork,andattempttosecurefundingforthemeasuresidentifiedattheCityfacility.4. EnovitywillperformthefollowingtaskstodevelopaProjectthatmeetstheCity'sInvestmentCriteria:a. PerformanInitialSiteInspectiontoidentifymeasuresb. CoordinateameasureslistreviewmeetingwithCitytoreviewthemeasuresandconfirminterestc. Identifyfundingsourcesthatmaynotsupportthemeasuresofinterest.d. Performon-sitedatacollection,pre-measurements,andtrenddatathatwillbeutilizedinthepreliminarymeasureanalysise. PreparepreliminarymeasureanalysisandbudgetaryconstructioncosttobeincorporatedintoapreliminaryProjectproposal("BudgetProposal")f. ProvideBudgetProposalforCityreviewandapprovalg. Interfacewithfundingsource(s)toconfirmconformanceoftheBudgetProposalandfacilitatefinalCityselectionofthemostviablefundingsource(s).FirmFixedPriceProposal (FFPP)5. Enovitywilldevelopadetailedanalysisandtailoredsolutionsforthefinalscopeofwork,obtainsubcontractorbidsasneeded,considerflow-downtermsandconditionsofthe selectedthird-partyfundingsource(s),anddevelopafirm-fixedimplementationcostandProjectimplementationschedule.6. EnovitywillprovideaFirmFixedPriceProposal(FFPP)totheCityforreviewandapproval.RESPONSIBILITIESOF CITY
FundingPre-Approval1. Citywillsubmitrequiredpre-approvaldocumentationforthefundingsource(s)ofinterest.2. Citywillexecutedocumentsrequiredtosecuretermsandcommitmentforthepreferredfundingsource(s).3. Citywillpayallrequiredutilityinterconnectionfeesdirectlytotheutility.Initial SiteAssessment (ISA)4. CitywillprovideEnovityscheduledaccesstoeachCityFacilitytoperformtheISAandparticipateinprojectmeetingsuponrequest.5. CitywillparticipateinaMeasuresListReviewMeetingtoreviewthemeasureswithEnovityandconfirmwhatmeasuresCityisinterestedinpursuing.6. CitywillprovideEnovitywithanypriorauditreports,drawings,andfacilityinformationrequiredtoevaluatetheidentifiedmeasures.7. CitywillworkwithEnovitytodevelopaProjectconformingtotheInvestmentCriteria.8. TheCitywillreviewandapproveaBudgetProposal,preparedbyEnovity, forconformancewithInvestmentCriteria,finalizetheselectionofthemostviablefundingsource(s),andprovidethetermsandconditionsoftheselectedfundingsource(s)asitmaypertaintoEnovity.FirmFixedPriceProposal (FFPP)9. CitywillreviewtheFirmFixedPriceProposal(FFPP)andnegotiateingoodfaithwithEnovitytoagreeontermsforanimplementationcontract.10.TheCustomerwillexecuteanythird-partyagreementsneededtofundtheProject.PROJECTSCHEDULETheprojectschedulewillbedevelopedandapprovedbytheCityoncetheprojecthasbeenfullydeveloped.ApreliminaryprojectscheduleisprovidedinExhibitC.
PROJECTCOSTAfinalscopeofworkandfirmfixedpriceproposalwillbeprovidedtotheCityforapprovalpriortomovingforwardwiththeproject.Ahighlevelroughorderofmagnitudeestimatehasbeenprovided.
EXHIBITC–PreliminaryProjectSchedule
Veolia’s mission is to resource the
world, providing tangible solutions
to help our customers address
their environmental and
sustainability challenges in
energy, water and waste.
February 14, 2024
Oakland Ice Center -
PV Expansion &
Refrigeration Project
Attachment B (2)
Presentation for Oakland Ice Center - 02/14/2024
Oakland Ice Center - PV & Energy Efficiency Initiative
Existing Conditions
PG&E & CCA Energy Use
● 2023 Energy Use - 1,243,624 kWh
● 2022 Energy Use - 753,365 kWh
● 2021 Energy Use - 531,347 kWh
PG&E & CCA Energy Costs
● 2023 Energy Costs - $292,346
● 2022 Energy Costs - $219,717
● 2021 Energy Costs - $127,376
PG&E & CCA Average Energy Rate
● 2023 Average Energy Rate - $0.2351
● 2022 Average Energy Costs - $0.2916
● 2021 Average Energy Costs - $0.2397
Average Rate Used in Analysis - $0.2351
Baseline Year
Presentation for Oakland Ice Center - 02/14/2024
Oakland Ice Center - PV & Energy Efficiency Initiative
PV Expansion Project
● NEM 2A Application Size - 381.4 kW
● Final PV System Size - 753.8 kW
● PV Expansion Production - 558,000 kWh/yr
● Total System Cost - $1,201,410 Including.
5% Contingency
● IFA ITC 40% Direct Pay - $480,564
● Discounted System Cost - $720,846
● Annual Cost Savings - $131,186
● Simple Payback - 5.49 years
● CEC Funding Available - $2,230,158
Presentation for Oakland Ice Center - 02/14/2024
Oakland Ice Center - PV & Energy Efficiency Initiative
PV Expansion Project
● Funded by 1% CEC Loan (Pre-Approved)
● Fixed Bi-Annual Payments
● First Payment is Due 12-months after
project completion
● Production Guarantee
● 25-year Panel Warranty
● 20-year Extended Inverter Warranty
● Estimated Maintenance Costs - $12,014/yr
● HUBGRADE Monitoring & Dashboard
Presentation for Oakland Ice Center - 02/14/2024
Oakland Ice Center - PV & Energy Efficiency Initiative
1% CEC Funding - Budget Neutrality
Presentation for Oakland Ice Center - 02/14/2024
Oakland Ice Center - PV & Energy Efficiency Initiative
PV Expansion Project - Financial Analysis
Presentation for Oakland Ice Center - 02/14/2024
Oakland Ice Center - PV & Energy Efficiency Initiative
PV Expansion Project - Financial Analysis - Cash Flows ITC Direct Cash
Payment to City of
Oakland
Banked Energy
Savings:
No payments
for up to 17
months
Presentation for Oakland Ice Center - 02/14/2024
Oakland Ice Center - PV & Energy Efficiency Initiative
PV Expansion & Refrigeration Project
PV Expansion & Refrigeration Project
● CEC Funding Available = Annual Project Cost Savings *17 ● CEC Funding is capped at $3,000,000 / Project
● Annual Project Cost Savings - $131,186
● CEC Funding Available - $2,230,159
● PV Expansion Cost - $1,201,410
● Current Refrigeration Project Funding - $1,028,749
● Potential Refrigeration Project Funding - $1,798,590
● Other Energy Savings Required - $45,285 / yr
Presentation for Oakland Ice Center - 02/14/2024
Oakland Ice Center - PV & Energy Efficiency Initiative
PV Expansion & Refrigeration Project - Financial Analysis
Presentation for Oakland Ice Center - 02/14/2024
Oakland Ice Center - PV & Energy Efficiency Initiative
PV Expansion & Refrigeration Project - Cash Flows
Presentation for Oakland Ice Center - 02/14/2024
&
Next Steps