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09-943Council File # Q�-�{L�J Green Sheet # 307727 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 Presented RESOLUTION ,- CITY OF SAIN�UL, MINNESOTA � RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAINT PAUL, NIIlVNESOTA Establishing Policy for Mana�ng the Energy Efficiency Loan Program WHEREAS, the Saint Paul City Council and Mayor Chris Coleman have championed efforts to preserve the environment and make the City of Saint Paul a national model for environmental protection and energy efficiency; and, WHEREAS, in 2007 the City passed a Resolution Establishing Policy for Managing the Energy Conservation Investment Fund (Fund 233), C.F. # 07-558; and WHEREAS, City staff have recommended that some changes be made to the program in order to increase incentives for implementation of additional projects that will further the goal of reducing energy usage and carbon dioxide (CO emissions; and WHEREAS, a pledge of up to $1 million dollars has been proposed from the Capital Improvement Projects Operating Fund (Fund 802) to finance contributions made by the Energy Conservation Invest Fund for reuofitting city facilities for energy efficiency improvements, (defined as including but not limited to: recommissioning studies; energy audits; energy ef£icient lighting; heating/ventilation and mechanical system improvements; energy management systems; and other energy efficiency projects deemed appropriate.); and WIIEREAS, in 2009, the City anticipates being awarded an Energy Efficiency and Conservation Block Grant (EECBG), available to city and county governments, under the federal American Recovery and Reinvestment Act (ARRA) of 2009 and anticipates receipt of $2.767 million in October, 2009 (C.F. # 09-646); and WHEREAS, Xcel Energy has agreed to participate in the City's energy efficiency projects and provide for viable project rebates. NOW, THEREFORE BE IT RESOLVED that: The Energy Conservation Investment Fund established in Resolution # 07-558 to provide for energy efficiency projects is hereby amended and replaced in its entuety by the policy guidelines as set forth in Exhibit A. 2. The four projects initiated under tbe original Energy Conservation Investment Funds (C.F. #k07-558) will now follow the new Energy Eff'iciency Loan Program policy in Exhibit A. The Energy Conservation Investment Fund will be established with a$1,OOQ000 transfer from the Capital Improvement Projects Operating Fund (Fund 802) as set forth in the policy guidelines in E�ibit A and the companion budget amendment. 4. The Energy Conservation Investment Fund (Fund 233) will repay up to $1,OOQ000 to the Capital Improvement Projects Operating Fund (Fund 802) at the fime the Energy Efficiency Loan program is dissoived or at a time when sufficient financing is secured for the Energy Efficiency Loan Program to both sustain the program and repaythe $1,000,000. ��-9�� 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 5. The City Energy Coordinator, the Director of the Office of Financial Services (OFS), DeparRnent Duectors, Housing and Redevelopment Authority Director, Director of the RiverCentre Convention & Visitors Authority, and other appropriate designees ue authorized to enter into an Energy Efficiency Loan Agreement upon substantial completion of an energy efficiency project that has been approved for financing from the Energy Conservation Inveshnent Fund. Loans to departments must follow the guidelines established in the Energy Conservation Investment Fund policy as set forth in Exhibit A. 6. To grow the Energy Conservation Investment Fund interest earnings on Fund 233 and all repayments from Energy EfFiciency loans will be retained by the fund and used for future projects. 'I'he Mayor's Environmental Director, the City's Energy Coordinator and other City staff wffi continue to investigate opportunities for the Mayor and City Council to apply for federal, state and nonprofit enrity grants related to energy efficiency for the City-owned facilities. 8. The City Energy Coordinator will provide the Mayor and City Council with an annual report coinciding with the Departrnent of Energy reports and the Sustainable Saint Paul report which snmmari�es the status of the energy efficiency projects (including projects anricipated, in progress and completed) and a fund balance statement (including funds expended, loan repayments, and unencumbered balance) beo nning in June, 2010. In addition, the project list will be updated quarterly starting in 7anuary, 2010, with the previous quarter's results. Bostrom C3t[0I Hazris Stark Thune Adopted by Council: Date Yeas ✓ •��� � �- -�. �� i f �t!/ i _ � � •�� � '� �� �� �. '/�� �� � �� I Absent Requested by Department of: O (i'e"e Ol �Yl.�✓W� O`�L By: Approved by the ffice of Financial Servic s By: � �— Approved by Ciry Attorney By: J9l �a c� ?�'.u�/ for Sub�ission to � Green Sheet Green Sheet Green Sheet Green Sheet Green Sheet Green Sheet � n� _��-� DepartmeM/OffieelCouneil: � Date Initiated: FS -Finanaal Services 2�-A��9 Green Sheet NO: 3077277 �• peuartmerN SeMToPefson Inrt�allDate Conta¢t pefson BPhone: . . _ - -- - - --- .._Amie`HanY. _ ... -.- �._ .- . __ ..o� wamaal�services ._.. _..,.._.._ ... . _�.._�.:.,. _�_.���.- __,:��......�..�.__._._.,- 266$520 ��� 1 ma¢c�al Services De arlment D�rector — � z � Assign 2 ttvAttorne �--� �U'— Must Be on Cou�il Agenda by (Date): Number � 02SEP-09 Fp� 3 or's O�ce Ma or/Avsistsnt Routing 4 oancl Doa Type• RESOLUTION Order 5 ' Clerk C' Clerk E-DocumeM Required: Y Document Contad: �e Hunt Contact Phone: 266-8520 � Total # of Signature Pages _(Clip A�I Loeations for Signature) Action Requested: . City Council approval of attached resolution amending the Energy Efficiency Loan Prograui. Recommenda6ons: Approve (A) or Reject (R): Personal Service Contrects Must Mswer the Following Questions: � Planning Commission 1. Has this person/firtn ever worked under a contract for this department? CIB Committee Yes No - Civil Service Commission 2. Has this person/firm ever been a city employee? Yes No � 3. 6oes this person/firm possess a skill not normally possessed by any current city employee? Yes No Explain all yes answers on separate sheet and attach to green sheet. ' Initiating Problem, Issues, Opportunity (Who, What, When, Where, Why): The resolurion makes several changes to the Energy Efficiency Loan Program: 1) the loan program will be financed with a transfer � from the Capital Improvemem Projects Operating Fund (not an advance from the sewer fund); 2) the loans will cover the wsts of the project after rebates and matching federal grant funds; 3) the payback terms aze amended to reduce the interest rates and shorten the term of the loan; 4) projects funded under the prior guidelines will now follow the new guidelines Advantages H Approved: Better management of the Energy Efficiency Loan Progcam Disadvantages If Approved: None Known Disadvantages If Not Approved: Energy Efficiency Loan Progrzm will not be in the financial interest of Departments ToWI Amount of . Transaction: �0.00 Cost/Revenue Budgeted: Funding Source: NA Activity Number. NA Financial Information: Companion Budget Amendment (Explain) . AuqUSt 25. 2009 8:12 AM Pana 1 Dy-9�1� Exlubit A Revised Policy for the Energy Efficiency Loan Program 1. Financing of the Energy Efficiency Loan Program, established in the Energy Conservation Investment Fund (Fund 233): The Energy Efficiency Loan Prob am shall be funded with: a) A$1,000,000 transfer from the Capital Improvement Projects Operating Fund (Fund 802). The Energy Conservation Investment Fund will repay up to $1,000,000 to the Capital Improvement Projects Operating Fund at the time the Energy Efficiency Loan Program is dissolved or at a time when sufficient financing is secured for the Energy Efficiency Loan Program to both sustain the program and repay the $1,000,000. b) Interest earnings and loan repayments shall be retained by the fund. c) $750,000 allocation from the 2009 American Recovery and Reinvestment AcYs (ARRA) Energy Efficiency and Conseroation Block Grant (EECBG) funds secured from the U.S. Department of Energy. d) Xcel Energy or other utility rebates for energy efficiency and renewable energy projects. e) Additional revenues secured by the City for energy efficiency and renewable energy improvements. 2. Financing of Energy Efficiency Projects: a) Funds will be loaned out to City Departrnents to allow for energy efficiency projects (defined as including but not limited to: recommissioning studies; energy audits; energy efficient lighting; heating/ventilation and mechanical system improvements; energy management systems; and other energy efficiency projects deemed appropriate) that result in energy savings to their respecrive facilities. b) Unless explicitly approved by the Ciry Council by resolution, all expenditures from the fund (less any rebates or designated grant funds) will be loans. There will be no grants except as authorized herein. Any grant resolution from the Council shall be accompanied by analysis from the Office of Financial Services (OFS) showing the impact the grant allocation would have on the Energy Conservation Investment Fund. c) Loans will be for actual project costs, including an energy audit or recominissioning study less grants from non-city revenue sources and utility rebates, when available. For example in 2009, it is anticipated that projects will be d� s� financed in part by federal Energy Efficiency and Conservation Block Grant funds (up to 35%), Xcel Energy rebates and loans from the Fund 233 for the net project costs. d) City departments which are principally supported by the City General Fund, and who wish to undertake energy efficiency projects will be given priority for loans available through the Energy Efficiency Loan Program. Loans for energy efficiency projects in buildings supported by Enterprise Funds (i.e. HRA ramps or the RiverCentre ramp, etc) will be considered but the Department must demonstrate an inabiliry to pay for project costs not covered by other funds. e) L.oans administered in Fund 233 will each have an individual project code established to track all expenditures for each energy efficiency project. fl OFS may require that department funds that aze matched with federal EECBG funds be transfened into Fund 233 for federal reporting purposes. g) The City Energy Coordinator will maintain a project file for each energy efficiency project, including a description of the recommissioning project, approval letter from Xcel for the rebate amount, the amount recommended for a federal energy grant (up to 35%), a copy of the energy audit analysis, if applicable, a copy of the executed loan agreement with the date of substantial completion, the energy payback calculation and applicable interest rate as determined by the City Treasurer and the loan amortization schedule. 3. Executing Loans from the Energy Efficiency Loan Program: a) The City Energy Coordinator wIll execute a loan agreement for each energy e�ciency project financed from this program. The agreement will include an amortization schedule and will be signed by the Duector of both the appropriate Department and the Office of Financial Services. b) The term of the loan will be for the lesser of the energy savings payback period (rounded up to the neazest year) or five yeazs maYimum. c) The interest rate wIll be the current applicable interest rate for U.S. treasuries plus one percent at the time the loan is executed as determined by the City Treasurer (if a five year agreement was entered into on 7/30/ 2009, the illustrative rate would be SYR T of 2.69% plus one percent, or 3.69%). d) The loan wIll be amortized at the interest rate described above; simple interest will begin to accrue the day following substantial completion date of the energy efFciency project. Annual level debt payment is due each anniversary of the substantial completion date of the recommissioning project. Interest will be applied first before amortization of principal. o�-��� 4. Energy Efficiency Project Selection Principles: a. Energy efficiency projects will be selected by the Energy Coordinator based in part on the State of Minnesota's B3 Initiative ranking system. The rank is a quantified number based on the annual utility cost and the facility specifications (i.e. age, square footage, building systems and use of facility). The result is an excessive energy usage percentage. Under this system, the higher the excessive energy usage percentage the greater the need to make energy conservation improvements. b. The Energy Coordinator will work with city property management staff to review suggested projects and seek department concurrence. c. Projects determined to be viable will proceed to Xcel Energy for rebate approval. 5. Process for Completing an Energy Efficiency Project: a. A project sheet will be executed between the City Department and the Energy Coordinator (OFS) describing the project, the initial project cost estimate, the energy savings payback period, the estimated amount of rebate, the method of payment (operating budget or short term loan), and the estimated substantial completion date. b. A cost estimate for approved projects and construction contracts will use the City's Master Contract process coordinated by Contracts and Analysis Services. a If the project cost increases over the original estimated cost on project sheet, the Energy Coordinator will notify the departrnent of the cost increase and the reason.