On October 10, 2017, City Council approved an agreement with Siemens Industries to perform a citywide investment grade energy audit, as well as develop and propose a design build, net budget neutral, energy efficiency facilities modernization project. The results of the audit identified conditions and equipment that waste energy and increase the City’s utility costs. Siemens Industries developed a comprehensive project that include facility improvement measures (FIM’s) that encompass LED lighting, energy efficient heating, ventilation, and air conditioning improvements, building plug load solutions and environmental management system  controls. 

The goal of the project is to reduce our energy use to a responsible level, resulting in reduced utility costs and make needed improvements to Parks and Facilities with net zero budget impact through Siemens performance contracting service. The total project costs will be offset by energy cost savings over the term of the project. Moreover, Siemens will provide a written guarantee of the projected utility savings and reduced operating costs.

Siemens conducted a financial and engineering analysis of proposed FIM’s at multiple City facilities. Based on that analysis, Siemens proposed a project whereby Siemens would complete the upgrades, with no out-of-pocket expense to the City and provide a mechanism for the City to pay Siemens from the energy savings over a 19-year period.

Moving forward, the City will realize continued savings through reduced energy costs, after paying off the project, as well as a reduction in maintenance and repair costs due to the replacement of inefficient outdated equipment. Additionally, by implementing the project, Public Works will eliminate necessary future capital expenses and costly emergency repairs. Because this project would be paid from the energy savings it provides a means for improving the aging infrastructure at multiple city parks and buildings that otherwise would not be possible. Public Works recognizes that this modernization project is in the best long-term interests of the City. The table below reflects the proposed FIM’s:

The General Purpose Fund will be borrowing an amount not-to-exceed $2,850,550 from the Risk Management Fund to pay for the energy efficiency project, per Siemens contract (attached). The payments to Siemens will cover the cost of the heating, ventilation, and air conditioning systems and lighting retrofit equipment and installation.

The General Purpose Fund will repay the loan over 19 years at the simple interest rate of 3.6%, which is an estimated tax exempt bond rate for A rated paper obtained from the City's external financial advisor (see Attachment 1: InterFund Loan and Repayment Agreement). The anticipated annual utility and maintenance savings from currently budgeted funds will be used to cover the costs of the annual interfund loan payments. Thus, the program is anticipated to be budget neutral.

It is recommended that the City Council:

• Approve the Interfund Loan and Repayment Agreement from the Risk Management Fund to the General Purpose Fund, in the amount not to exceed $2,850,550, with the first annual payment beginning in Fiscal Year 2019-2020;
• Approve the agreement with Siemens Industries, Inc., for the City's Facilities Energy Efficiency Project in the amount of $2,800,000; and
• Authorize the City Manager to sign the agreement on behalf of the City, and make minor modifications as appropriate.

By:  Phillip Carter

       Facilities Manager