Council directs staff to pursue investment-grade audit; solar installation decision left for follow-up

Schneider Electric representatives presented options for solar installations at three city sites and recommended performing an investment-grade audit (IGA) to identify energy-efficiency projects and final designs. The company highlighted an expiring federal incentive that creates urgency for any solar procurement.

Peter Henkel of Schneider Electric said the federal Investment Tax Credit (ITC) — available as a 30% direct-pay benefit under the Inflation Reduction Act — is changing and the city should act quickly to capture the credit. Henkel explained the procurement requirement known as a "hold harmless" that typically requires purchasing a portion of equipment (about 5%) before a deadline in order to secure the credit.

"There is a lot of unknowns as far as how can you get this equipment... part of the requirement is to have a certain percentage or the project already started, meaning that hold harmless piece of 5%," Henkel said, adding that the practical internal deadline to place equipment orders would be about Oct. 1 to meet the Dec. 31 tax-code changes.

Kurt Hayward, Schneider’s solar designer, reviewed site-specific options: a roughly 88-kW DC canopy for police headquarters covering about 15 parking spaces, and two ground-mounted approximately 100-kW DC systems at the east and west wastewater treatment plants. Hayward said the police canopy was sized to meet on-site consumption and provide covered parking; production estimates for the police site were in the mid-30% of the building’s annual usage. Henkel and Hayward described warranties, design parameters, and operational monitoring.

Council discussion focused on payback and financing. Schneider presented model estimates showing a payback period of roughly 20–30 years for the wastewater systems and 25–30 years for the police site, depending on financing assumptions and assumed energy-price escalation. Henkel noted a 30% ITC value across the project: approximately $500,000 of tax-credit value was estimated across the three sites in earlier modeling, and he described an alternative financing structure that could reduce the immediate ITC impact to 25.5% under certain public financing arrangements.

After questioning, councilmembers expressed support for proceeding with the investment-grade audit and asked staff to return with financing scenarios and sensitivity modeling (for example 3%, 5%, 10% annual energy-cost escalation and different lease/purchase options). City Manager Mike Sprigg said the sewer enterprise fund does not currently have sufficient cash to pay the entire capital cost and that any wastewater-plant installations would be funded from that enterprise; staff will model whether the project could be absorbed without a rate increase or would require financing across multi-year repayment.

Council did not authorize solar construction at the meeting. Members indicated a preference to move quickly on the IGA and requested a short follow-up meeting to review the financial scenarios and finalize direction before a procurement deadline. Schneider said it could provide more detailed models within 1–2 business days.

No formal ordinance was adopted for solar; the council gave direction to proceed with the investment-grade audit and additional financial analysis.