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HomeMy WebLinkAbout2013/08/06 Item 05CITY COUNCIL AGENDA STATEMENT ~~ CITY OF CHUTA VISTA 8/6/13, Item ~ ITEM TITLE: RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA AUTHORIZING (1) SUBMITTAL OF A 5300.000 L0~4'-II~TTEREST CALIFORI~'IA ENERGY CO\4I~4ISSION LOAN FOR REPLACEMENT OF THE SOUTH LIBRARY S HEATING A\~D AIR CONDITIONING SYSTEM; (2) ACCEPTANCE OF THE LOAN PROCEEDS. rVND (3) EXECUTIO\' OF ALL NECESSARY DOCUMENTS BY THE CITY MA\TAGER StiBMITTED BV: DIRECTOR OF PUBLIC ~4'ORKS ADMINISTRATNE RVICES 1\ ER REVIEWED BV: CITY MANAGE ASSISTA\TT CITY ~ 4ANAGER 4hTHS VOTE: PES ~ NO SU1~L~4ARP Chula Vista actively manages its 1;100 municipal energy and water utility accounts to reduce long-term costs and associated ereenhouse eas emissions. Staff has identified the replacement of the South Librazy heating; ventilation, and air conditioning (HVAC) system as a top priority due its inefficiency and end-of--life status. As such; staff is requesting formal approval to apply fora 5300;000 low-interest California Energy Commission loan to install a more efficient HVAC unit. If funded, the loan would be fully repaid by the resulting 532;600 in annual utility cost savings (9.2 yeaz simple payback). ENVIR017~IENTAL REVIE~i' The Development Services Director has reviewed the proposed project for compliance with the California Environmental Quality Act (CEQA) and has determined that the project qualifies fora Class 1(a) categorical exemption pursuant to Section 1301 (Existing Facilities) of the State CEQA Guidelines because the proposed expenditure of funds will result in the replacement of an existing heating and air conditioning system with no expansion of an existing use. Thus; no further enviromnental review is required. RECOA'IYIENDATION Council adopt the resolution. 5-1 8/6/13, Item Page Z of 3 BOARDS/COMMISSION RECOMMENDATION Not applicable. DISCUSSION There are over 1,100 energy and water utility meters associated ~=ith municipal buildings and facilities totaling over 56.1 million in annual utility costs. As such, City staff actively tracks and manages electricity, natural gas; and water consumption and identifies opportunities to improve their efficient use, thereby reducing long-term utility costs. These efforts are aligned with the Chula Vista Municipal Building Energy Effrciency Policy (Resolution #2005-048) and the revised Climate Action Plan (Resolution #2008- 177), which both highlighted energy and water efficiency retrofits as a key strategy to improving local air qualit}= and lowering greenhouse gas emissions. Furthermore, efficiency retrofits t}pically produce multiple co-benefits such as_ increased comfort for building occupants and lower maintenance liabilities. City staff has identified the replacement of the South Library heating, ventilation, and air conditioning (HVAC) system as a top energy management priority. In addition to being inefficient, the 18-yeaz old existing HVAC system is on the City's "critical needs" list due its pending mechanical failure. As such, staff is requesting formal approval to apply for a $300;000 lov,=-interest California Energy Commission (CEC) loan to replace the existing HVAC system with a more efficient unit. The CEC loan program is specifically designed to allow public agencies to improve their buildings' energy efficiency and renewable energy capacity. CEC loans, which have 1 % interest rates, rely on energy cost savings to repay the debt service over the life of the loan (up to 15 years). Based on the review of the project specifications by an external consultant, the South Library HVAC project is expected to lo~~=er annual energy use by over 164,800 kWh and generate approximately $32,600 in yearly cost savings, which would be used to fully cover the loan debt service (9.2 year simple payback). In addition to the energy savings; the project would ensure that the South Library's operation would not be negatively impacted by the current HVAC system's failure. If awarded the loan, staff would return to City Council to appropriate the funding. DECISION MAKER CONFLICT Staff has reviewed the property holdings of the City Council and has found that Councilmember Ramirez has property holdings within 500 feet of the boundaries of the property which is the subject of this action. Although this could create a conflict for Councilmember Ramirez, pursuant to California Code of Regulations sections 18704.2, 1870, and 18705.2, no conflict exists. Staff is not independently aware, nor has staff been informed by any City Councilmember, of any other fact that may constitute a basis for a decision maker conflict of interest in this matter. 5-2 8/6/13. Item 5 Page 3 of 3 CL"RRE\~T I~AR FISCAL Ii\4PACT There is no net impact to the General Fund. If awazded; the California Energy Commission loan would be fully repaid using the South Librazy I-MAC projects 532;600 in annual utility cost savings. In addition, City' staff time associated with the project Hill be supported through the SDG&E Local Government Partnership, which is funded by California utility' ratepayers under the auspices of the California Public Utilities Commission. ONGOING FISCAL ID4PACT The 5300.000 CEC loan «rould be fully offset by 532;600 in estimated annual energy savings (simple payback 9.2 yeazs). After the financine is repaid; the City's General Fund would realize the full energy cost savings annually. In addition, the City will realize more immediate energy cost savings as utility rates increase even' few years and as maintenance costs aze avoided. - ATTACHMENTS Attachment A -California Energy Commission (CEC) Loan Guidelines Prepared b}c Brendan Reed, Emvonmental Resource ,Manager, Public Works-Conservation N:IPGBLfC {f'ORKS- ENGIAGEND.41CA5?013108-06-131REPORT-Pif'-South Library CEC Loan .4pp(icarion_Ff?~`AL.dac 5-3 ATTA~1-~VfEt~T ll Energy Conservation Assistance Act (ECAA) ®~ No application fees, points, or hidden costs Interest ate 1®/® FINANCING FOR ENERGY EFFICIENCY & ENERGY GENERATION PROJECTS EDMUND G. (JERRY) BROWN JR. Governor California Energy Commission http://www.energy.ca.gov/efficiency/f nancing/index. html Phone: (916)654-4104 5-4 FINANCING FOR ENERGY EFFICIENCY Who is Eligible? Only the following entities are eligible for these funds: • Cities Counties Public Schools & Colleges Special Districts Public Care Institutions Public Hospitals Residential and commercial projects and non-profit institutions are not eligible for these funds. How Much Funding is Available? Approximately S25 million is currently available. The maximum loan amount is S3 million per application. There is no minimum loan amount. The Energy Commission reserves the right to increase the amount of funds under this loan notice if and when additional loan funds become available. What is the Funding Source? Funds used in this loan notice originate from one or more of the following: ~ Energy Conservation Assistance Act (ECA,4) ~ Bond Proceeds from ECAA Tax-Exempt Revenue Bonds ~ Renewable Resources Trust Fund (RRTF) The Energy Commission reserves the right to add funding sources under this loan notice if and when additional funding sources become available. When Should You Submit Your Application? Funds are limited. Complete applications will be processed and reviewed by technical staff in the order received. Applications are deemed complete if they include all necessary documentation to verify eligibility and compliance with all requirements. The Energy Commission reserves the right to close or change the loan notice at any time, so don't delay. Energy Conservation Assistance Act 525 Loan Notice What Projects are Eligible? Projects with proven energy and/or demand cost savings are eligible, provided they meet the ECAA eligibility requirements (see Criteria for Loan Approval below). Projects already funded with an existing loan or already installed are ineligible. Examples of Qualified Projects: • Lighting systems • Heating, ventilation and air conditioning equipment • Streetlights and LED traffic signals • Energy management systems and equipment controls • Pumps and motors • Building insulation • Energy generation including renewable energy and combined heat and power projects • Water and waste water treatment equipment • Load shifting projects, such as thermal energy storage How are Funds Disbursed? The funds are available on a reimbursement basis. For each reimbursement request, receipts and invoices for incurred expenses must be submitted along with proof of payment. The final 10 percent of the funds will be retained until the project is completed. Interest is charged on the unpaid principal balance of the loan computed from the date of each disbursement to the borrower. When Can You Start Your Project? Your loan agreement must be fully executed (i.e. signed by the Energy Commission) before you can start your project. Only approved project-related costs with invoices dated within the term of the executed agreement are eligible for reimbursement under the loan. If the loan is not approved or executed, the Energy Commission is not responsible for reimbursement of any costs. Energy Conservation Assistance Act 536 Loan Notice Criteria for Loan Approval: Projects must be technically and economically feasible. A feasibility study is required to verify the estimated energy savings. Projects must be repaid from savings within 15 years, including principal and interest. This results in an approximate 13-year simple payback and is based on the estimated first year energy cost savings. Partial funding can be provided for projects with a simple payback greater than 13 years. Simple Payback (yrs) = Amount of Loan (~l Anticipated Annual Energy Cost Savings ($/yr) Interest Rate: The interest rate is fixed at 1 % for the term of the loan. The interest rate is valid until a new loan notice is issued or the loan notice is closed. This interest rate will apply to all original loans approved at an Energy Commission Business Meeting on or after February 14, 2012 (the date PON-11-610 was released). Original loan includes the first or initial approval of a loan by the Energy Commission, and does not include amendments, time extensions or augmentations of budget. This interest rate will not be applied retroactively to existing loans originally awarded at a Business Meeting under a previous notice (before February 14, 2012). Loan Security Requirements: It's simple. A promissory note and a loan agreement between you and the Energy Commission are all that is required to secure the loan. Repayment Terms: The repayment schedule is based on the estimated annual energy cost savings from the aggregated project(s), using energy costs and operating schedules at the time of loan approval. Loans will be amortized on the estimated annual energy cost savings achieved by the loan-funded project. Applicants will be billed twice a year, in June and December, after the projects are completed. Loans must be repaid from energy cost savings or other legally available funds within maximum term of 15 years, including principal and interest. The loan repayment term cannot exceed the useful life of the loan funded equipment. Other Requirements: All documents are public records and will not be kept confidential. Certain loans will require a tax certificate. Energy Conservation Assistance Act g4~ Loan Notice How Do You Apply? Simply submit the following information: 1. Completed and signed Loan Application (Attachment 1). 2. Completed Summary of Recommended Energy Efficiency Measures in Loan Request Table (Attachment 2). 3. Feasibility Study (may be submitted via CD or flash drive). The study must contain: a) description of energy efficiency projects and buildings/ facilities affected by these projects, b) discussion of baseline energy use for the affected facilities, including annual energy related utility bills, c) all calculations and assumptions to support the technical feasibility and energy savings of the recommended projects, d) proposed budget detailing all project costs, and e) proposed schedule for implementation of the projects. 4. Copy of a signed resolution, motion, order, etc, from your governing board (see Attachment 3 for a sample). The resolution must be submitted with the application. The title of the official signing the loan agreement should be the same one named in the resolution, motion, or order. The resolution/agenda item must include the finding on CEQA compliance. If the CEQA finding is in the agenda item, include both the item and the resolution. If the CEQA finding is in the resolution, application does not need to include a copy of the agenda item. 5. California Environmental Quality Act (CEQA) Compliance Documentation (see Attachment 4 for more information). Include a copy of documentation demonstrating that the applicant has complied with CEQA in approving the project. There are three possible actions the applicant can take. The applicant could determine that the activity undertaken by the loan is: - Not a project (include a statement that all projects in the loan are not CEQA projects, and analysis supporting the conclusion that the activity is not a project); A project that is exempt (include the Notice of Exemption); . - The project is not exempt, in which case the applicant should include the Notice of Determination and indicate which type of environmental document it has prepared: Negative Declaration Mitigated Negative Declaration Environmental Impact Report Energy Conservation Assistance Act 5~8 Loan Notice Where Do I Submit My Application? Send your loan application and all supporting documentation to: California Energy Commission Special Projects Office Attn: ECAA Loan Program 1516 Ninth Street, MS-23 Sacramento, CA 95814-5512 Who Do I Contact for Assistance/Questions? Call or email the California Energy Commission to discuss project and facility eligibility, funding availability, and application requirements: (916)654-4104 Email: PubProg(a~energy.ca.gov Loan Notice Documents: A copy of the Loan Notice, Loan Application, sample Loan Agreement, and all Attachments to this Loan Notice are available for downloading at: htto://www.energv.ca.gov/efficiency/financino/ Hard copies can be requested by contacting: California Energy Commission ECAA Loan Program 1516 Ninth Street MS-23 Sacramento, CA 95814 E-mail: PubProg anenergy.ca.gov Application Review Process: Energy Commission staff will review your loan application. It may be necessary to arrange a site visit to discuss your project and loan request. Attachments to this Loan Notice: Attachment 1: Application for Energy Commission Financing Attachment 2: Summary of Recommended Energy Efficiency Measures in Loan Request Attachment 3: Sample Resolution Attachment 4: CEQA Compliance Documentation Information Energy Conservation Assistance Act 5S9 Loan Notice RESOLUTION NO. 20li- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA AUTHORIZING (1) SUBMITTAL OF A $300.000 LOW-INTEREST CALIFORNIA ENERGY COMMISSION LOAN FOR REPLACEMENT OF THE SOUTH LIBRARY'S HEATING AI~tD AIR CONDITIONING SYSTEA~. (2) ACCEPTANCE OF THE LOAN PROCEEDS, AND (3) EXECUTION OF ALL NECESSARY DOCUMENTS BY THE CITY MANAGER VIHEREAS, the City of Chula Vista ("City') actively manages its 1,100 municipal energy and water utility accounts to reduce long-term costs and associated greenhouse gas emissions: and WHEREAS, City staff frequently identifies opportunities to improve energy and water efficiency in order to lower utility costs, reduce maintenance liabilities; and improve building comfort: and WHEREAS, the replacement of the South Library heating, ventilation, and air conditioning (HVAC) system has been identified as a top energy management priority due to its inefficiency and pending mechanical failure; and WHEREAS, the California Energy Commission ("CEC") provides loans to local governments to finance energy efficiency improvements; and WHEREAS. staff is requesting forma] approval to apply fora $300,000 low-interest CEC loan to replace the existing HVAC system with a more efficient unit; and . WHEREAS; the CEC loan program is specifically designed to allow public agencies to improve their buildings' energy efficiency and renewable energy capacity; and WHEREAS, the South Library HVAC project would generate approximately $32;600 in annual cost savings, which would fully cover the loan debt service. NOW, THEREFORE, the City Council oT' the City of Chula Vista hereby resolves the following: 1. The City, acting through its City Manager or his designee, is authorized to apply for an energy efficiency loan from the California Energy Commission to implement energy efficiency measures (the South Library HVAC project). 2. In compliance with the California Environmental Quality Act, the City Council finds that the activity funded by the loan qualifies for a Class 1(a) cateQorica] exemption pursuant to Section 15301 (Existing Facilities) of the State CEQA Guidelines. l:\.4norney\FINAL RESOS AND ORDIhANCES\2013\OS 06 13\RESO-PR'-South Libran• CEC Loan App I i cation_DRAFTl1I. doc 7/26/2013 3:30 P~9 5-10 3. If recommended for funding b.' the California Energv Commission, the Cin° is authorized to accept a loan up to X300,000. 4. The amount of the loan ~',~ill be paid in full plus interest, under the terms and conditions of the Loan Agreement. Promisson~ Note; and Tax Certificate of the California Enerev Commission. ~. The Cin~ Manager; or his designee; is authorized and empo~;ered to execute in the name of the City all necessary documents to implement and cam' out the purpose of this resolution. and to undertake all actions necessar~~ to undertake and complete the enerev efficiency projects. Presented b~~ Richard A. Hopkins Director of Public R'orks 7:Wnomey\FINAL ]tESOS AND ORDI~ANCES\?013\08 06 li\RESO-PR'-South Libran• CEC Loan Appl icati on_DRAFTI I Ldoc i/?6120li 3:30 Pi`9 5-11