Title
STAFF REPORT for the City of San Leandro City Council to Hold a Public Hearing Pursuant to California Government Code Sections 4217.10 and 4217.18 to Adopt Certain Findings and a Resolution to Approve an Installation Agreement with Climatec, LLC for Design and Construction of Energy-Efficiency and Resiliency Projects at Various City locations for a Total Cost of $4,994,884; Appropriation of $395,828 from Account 210-18-149-5242 (Building Maintenance Fund); and Appropriation of $3,314,916 from American Rescue Plan Act (ARPA) Account 190-17-815-5240
Staffreport
SUMMARY AND RECOMMENDATIONS
Staff recommends that, in accordance with California Government Code sections 4217.10 and 4217.18, the City Council hold a public hearing, adopt certain findings, and authorize the City Manager to enter into an Installation Agreement with Climatec, LLC to implement energy-efficiency and resiliency projects at various City facilities and infrastructure. The total cost for the Energy Services Contract is $4,994,884, with a majority of the funding earmarked and previously approved by the City Council to be appropriated from the City’s American Rescue Plan Act funds. Prior to the onset of the pandemic, the City received notification from the California Energy Commission (CEC) for approval to enter into its 1% loan program to cover a portion of this project’s costs. Due to the pandemic, formal action by the City Council to accept the CEC loan was put aside. Staff is currently working to finalize a new loan agreement in the amount of $1,284,140, which will be brought to Council for consideration in early 2022. The last portion of proposed project funding, at $395,828, will be from the Building Maintenance Fund.
BACKGROUND
In December 2009 the City adopted a Climate Action Plan (CAP), with a vision to guide San Leandro towards a sustainable future that reduces greenhouse gas emissions from current levels, while promoting economic prosperity for present and future generations. That document was updated and adopted by the City Council in July of this year.
For the CAP’s database year of 2005, the City’s measurable municipal operations, which are made up of municipal buildings, fleet, streetlights, water/sewage operations, and municipal waste, constituted less than one percent of San Leandro’s total emissions. The 2021 CAP notes that while this percentage is on the low end of the typical range, and that actions to reduce municipal energy use may have a limited impact on San Leandro’s overall community emissions levels, municipal actions can help reduce operation/maintenance costs, including utility payments, and meet City Council goals by demonstrating leadership that extends beyond the magnitude of emissions actually reduced. As an example, last year’s installation of the 1 MW solar array at the Water Pollution Control Plant is resulting in utility bill savings of approximately 50% (or savings of more than $250,000) annually.
ANALYSIS
These projects were originally anticipated in 2019, with the City applying to the California Energy Commission for partial funding (through a 1% loan), in addition to utilizing Building Maintenance funds and possibly General Funds. The City received notification from the CEC of the loan approval, pending acceptance by the City Council. However, with the financial uncertainties evident during the first months of the pandemic, this potential work was set aside.
Phase III of the City’s on-going energy efficiency work with Climatec represents a combination of improvements identified in the 2016 Citywide assessment that were either of a lower priority, did not meet previous grant/loan requirements for funding, or both, and new opportunities for upgrades resulting from ARPA monies received by the City. This work represents a variety of infrastructure upgrades, including the following (see also Attachment B to this report):
Heating, Ventilation and Air Conditioning (HVAC) and Indoor Air Quality (IAQ)
• New high efficiency HVAC units with economizers and MERV-13 filters
o City Hall
o Fire Stations #9-13
o History Museum
o Main Library
o Manor Branch Library
o South Branch Library
o Public Safety Building
o Public Works Admin Building
o San Leandro Family Aquatic Center
• New high efficiency chillers and pumps
o City Hall
o Public Safety Building
• New air handling units with MERV-13 filters
o City Hall
o Public Safety Building
• Refurbish duct heaters and condensing units, and include MERV-13 filters
o City Hall
Building Automation System (BAS)
• New BAS
o Fire Stations #9, #12, #13
o Public Works Admin Building
• Integrate economizer control into existing BAS
o City Hall
o Fire Stations #9-13
o History Museum
o Main Library
o Manor Branch Library
o South Branch Library
o Public Safety Building
o Public Works Admin Building
o San Leandro Family Aquatic Center
• Recommission existing BAS
o City Hall
o Fire Stations #10-11
o History Museum
o Main Library
o Manor Branch Library
o Public Safety Building
o San Leandro Family Aquatic Center
• Repair problematic lighting control - Main Library
Lighting
• Interior LED lighting modernization
o City Hall
o Fire Stations #9-13
o Main Library
o Manor Branch Library
o South Branch Library
o Marina Community Center
o Public Safety Building
o Public Works Admin Building
o San Leandro Family Aquatic Center
o Senior Community Center
• Exterior LED lighting modernization
o City Hall
o Fire Station #9, 11, and 13
o Manor Branch Library
o Public Safety Building
o Public Works Admin Building
o San Leandro Family Aquatic Center
o Senior Community Center
Pool
• New high efficiency variable frequency drive (VFD) and smart pump control system - San Leandro Family Aquatic Center
Smart City Technology
• Upgrade and expand Paradox (streetlights) controls - Citywide
Current Agency Policies
• General Plan Policy OSC-7.6: Reducing Municipal Greenhouse Gas Emissions. Reduce greenhouse gas emissions associated with municipal operations, including those associated with energy use, City vehicles, City recycling and composting operations, and utilities.
• 2021 Climate Action Plan Policy ME-1: Municipal Energy Retrofits. Continue implementing municipal energy efficiency retrofits, including all-electric buildings and public lighting retrofits.
Environmental Review
This project is determined to be Exempt under the California Environmental Quality Act (CEQA) Section 15301. Existing Facilities.
Legal Analysis
California Government Code section 4217 design-build energy legislation has been used hundreds of times over the past 30 years to procure projects similar to the one currently proposed. This includes the previous phases of work Climatec has performed for the City. If the City elected to design, engineer, and construct a similar program through the traditional design-bid-build approach, it would not only take much longer to implement the efficiencies, but also expose the City to change orders, scope gaps between separate contractors, and require significant upfront capital for the necessary design and engineering work.
As with the previous Climatec-led projects, competitive bidding will be done for the major components of the project. This project will also be subject to the City’s Community Workforce Agreement (CWA), with full transparency on the competitive bids and resulting subcontractor selection.
The City Attorney reviewed the draft agreement, together with staff negotiated edits and changes, and with Climatec’s acceptance of the City’s changes, approves the agreement as to form.
Fiscal Impacts
The total cost for infrastructure improvements, including taxes and bonds, equals $4,994,884. The majority of the funding, $3,314,916, was earmarked and previously directed by the City Council to be derived from American Rescue Plan Act funds over the course of this fiscal year and next. Prior to the onset of the pandemic, the City had received notification from the California Energy Commission (CEC) for approval to enter into its 1% loan program to cover a portion of this project’s costs. Due to the pandemic, formal action by the City Council to accept the CEC loan was put aside. Staff is currently working to finalize a new loan agreement in the amount of $1,284,140, which will be brought to Council for consideration in early 2022. The third portion of proposed project funding, at $395,828, derives from the Building Maintenance Fund.
Climatec estimates that in excess of $5 million dollars in operating savings will be realized over the 20-year life of the new equipment.
Budget Authority
Approval of this current agreement with Climatec requires appropriation of $395,828 from Account 210-18-149-5242 (Building Maintenance Fund), and appropriation of $3,314,916 from American Rescue Plan Act (ARPA) Account 190-17-815-5240. The City Council recently provided direction to staff on the list of ARPA programs/projects, indicating $1,900,000 in Fiscal Year 22 and $1,900,000 in Fiscal Year 23. At the time the ARPA list was formulated, staff and Climatec were still working on final project numbers. It is noted that with the need for only $3,314,916 of ARPA funds, $485,084 may be re-directed to other listed programs/projects.
ATTACHMENTS
• Attachment A - Installation Agreement
• Attachment B - Detailed Assessment
PREPARED BY: Debbie Pollart, Director, Public Works Department