HomeMy WebLinkAboutStaff Report 3.B 03/06/2017N
DATE:
TO:
FROM:
SUBJECT
Agenda Item #3.B
March 6, 2017
Honorable Mayor and Members of the City Council through City Manager
Dan St. John, F.ASCE — Director, Public Works & Utilities
Larry Zimmer, P.E. — Deputy Director, Public Works & Utilities
Resolution Authorizing a Loan Not to Exceed $1,490,000, from the Waste Water
Fund to the LED Streetlight Retrofit Project and Approving the Project Budget
RECOMMENDATION
It is recommended that the City Council adopt the attached Resolution Authorizing a Loan Not
to Exceed $1,490,000, from the Waste Water Fund to the LED Streetlight Retrofit Project and
Approving the Project Budget.
BACKGROUND
The City owns and maintains 5,458 streetlights. The majority of the lights use the high - pressure
sodium bulb and ballast system (HPS), which have higher energy and maintenance costs
compared to light emitting diode (LED) lighting.
The City completed its first LED retrofit project in 2012 using American Recovery and
Reinvestment Act of 2009 funding, which replaced 138 streetlights at a cost of $78,855. A
second retrofit project in March 2016, using Pacific Gas & Electric (PG &E) On -Bill Financing
(OBF), converted 724 existing City -owned streetlights at a cost of $240,153.
The PG &E OBF Program allows government agencies to make energy improvements without
large outlays of cash by borrowing money at 0% interest. The loan is paid back through the
energy savings realized on monthly utility bills when higher wattage lights are retrofitted with
LEDs to save energy. Government agencies may qualify for the one -time streetlight project loan
up to $250,000 with a loan repayment period up to 10 years. The March 2016 retrofit project will
save $49,677 per year on the utility bill and the construction loan will be paid back in five years.
DISCUSSION
This project will retrofit all remaining HPS lights citywide except the historic style lights and
locations with known power supply problems. Since most of the arterial lights in commercial
areas have been replaced, the project area will be non - commercial arterial, collector, and local
roads. These existing HPS lights are of a lower wattage than in the commercial area, therefore
the energy savings per bulb will not be as great as in previous projects. Replacement of high
wattage HPS lights with LED fixtures will result in about 70% less watts used. The lower
wattage HPS lights replaced in this project will reduce watts used by approximately 50 %. In
addition to the significant reduction in electricity cost, the LED lights last longer and therefore
reduce staff time and costs to replace lights and ballasts in the future.
As part of the retrofit work, the contractor will repair burned -out bulbs, fuses, ballasts,
photocells, or lose wiring, which may be causing a current outage. However, some non - working
streetlights are due to broken conduit or corroded wires, which require more extensive
construction repairs and are not part of the proposed scope of work. At this time, known light
outages due to power supply problems amount to less than two percent of the total inventory of
streetlights. Staff will work with the awarded contractor to identify the required repair to
complete as many as possible power -out locations by contract change order within the project
contingency. Staff will prioritize streets with higher traffic volume. Not all light outages will be
repaired by this project.
Six hundred sixty streetlights located in city -owned parking lots and the historic -style lights
mostly downtown will not be replaced at this time because they are differently styled fixture
shapes, which are much more expensive to replace and therefore extend the project payback time
significantly.
Public streetlights are not normally metered individually. Instead, Pacific Gas & Electric
(PG &E) charges the City a fixed monthly rate for each street light based on fixture type and size.
The rate is calculated based on 4,100 annual operating hours at the bulb wattage rating. The LED
streetlight rates are much lower for the same lighting level because the HPS streetlights use a
much higher wattage bulb. The estimated reduction in monthly charges will be used to pay off
the interfund loan for the project.
The proposed action meets Council Goal: "Sustainability Practices: Design and deliver cost -
effective energy and other resource savings projects for city facilities and infrastructure."
FINANCIAL IMPACTS
PG &E staff provided preliminary estimates for the proposed work because of their in -depth
experience with streetlight retrofit projects. For the remaining 3,936 streetlights, they projected a
retrofit cost of $1,312,449 and savings of 1,063,795 kilowatt -hour per -year, which will reduce
the utility bill approximately $145,889 every year. However, the total project cost is estimated to
be $1,490,000 including design, project management, inspections, and contingency.
Funding for the work is proposed to be provided by a loan from the Waste Water Fund. The
Waste Water Fund was selected as the funding source because it has the resources to finance the
loan given the proposed payback period. It is estimated that the $1,490,000 loan will be paid
back in amlual payments of $144,225 for 11 years at a 1.25% interest rate. After the loan is paid
off, the Streets and General Funds will realize the full energy savings from the project. The
wastewater fund currently has an adequate balance to loan for this project. The interest rate
earned on the loan by the Wastewater Utility will be higher than the rate of interest earned in the
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pool of City investments. The interest rate paid by the Streets and General Fund will be less than
what would be paid through a more traditional financing.
ATTACHMENTS
1. Resolution
Attachment 1
RESOLUTION AUTHORIZING A LOAN NOT TO EXCEED $1,490,000, FROM
THE WASTER WATER FUND TO THE LED STREETLIGHT RETROFIT PROJECT
AND APPROVING THE PROJECT BUDGET
WHEREAS, the City owns and maintains 5,458 streetlights, the majority of which are
high pressure sodium (HPS); and
WHEREAS, HPS streetlights are not energy efficient, have high operation and maintenance
costs; and
WHEREAS, Light Emitting Diode (LED) lighting consumes less energy than HPS
lighting, which reduces energy costs and maintenance requirements as compared to HPS bulbs;
and
WHEREAS, the City is using a new LED street light standard for new streetlights; and
WHEREAS, City staff worked with PG &E to analyze energy usage of the streetlight system
and identify the savings generated from energy efficient LED streetlights; and
WHEREAS, staff is proposing to convert approximately 3,936 existing City -owned
streetlights from HPS to LED through a construction contract; and
WHEREAS, the City has an Interfund Loan Policy that allows the internal transfer of
funding and agreement that the City will repay the loan through the realized savings from the
monthly utility bills; and
WHEREAS, the City will implement a competitive process to select a contractor.
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City hereby:
1. Finds based upon the City staff report and presentation that the LED Streetlight Retrofit
Project is in the best interest of the City, and that funds for the repayment of the loan are
projected to be available from revenues available from funding that would otherwise have
been used for purchase of electrical energy.
2. The amount of the loan and repayment to be covered by the Agreement shall be set
pursuant to provisions in the Interfund Loan Policy, but shall not exceed $1,490,000, (one
million four hundred and ninety thousand dollars) and the maximum term of the loan of
11.25 years (eleven and one - quarter years).
3. Authorize the City Manager to take all actions to effectuate this loan.
4. Approves the LED Streetlight Retrofit Project budget in the amount of $1,490,000.
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