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Escondido council approves $55.9 million not-to-exceed energy roadmap, $46 million lease financing
Summary
Council approved resolution 2025-107 to implement a citywide energy roadmap with Climate Tech, authorizing a first amendment to the energy services agreement and a $46 million lease-purchase agreement with Bank of America; Climate Tech guaranteed lifecycle savings and staff outlined a financing plan using Measure I and internal funds.
The Escondido City Council approved a resolution to implement a citywide energy roadmap that staff and Climate Tech said will modernize city HVAC, lighting, water and wastewater equipment and add solar, EV charging and microgrids.
Council approved Resolution No. 2025-107 to (1) amend the energy services agreement with Climate Tech and (2) enter a lease-purchase agreement with Bank of America Public Capital Corp. to fund the program. The motion passed 4-0.
Why it matters: Staff said the work addresses aging infrastructure, reduces operating costs and supports the city's climate-action goals. The plan uses guaranteed energy and operational savings to cover debt service over time; Climate Tech provided a performance guarantee and staff presented a financing package intended to limit short-term impact on the general fund.
Scope and cost: The program was presented as a not-to-exceed price of $55,900,000 and covers eight categories including HVAC and building controls, lighting conversion, solar PV, EV charging, central-plant modernization for City Hall, water and wastewater equipment upgrades and microgrid systems for critical facilities.
Financing summary: Staff proposed an initial city cash contribution of $10,000,000 (approximately $7,800,000 from the workers' compensation internal service fund plus $2,125,880 from Measure I) and a tax-exempt equipment lease-purchase of $46,000,000 with an interest rate a little over 4 percent over 20 years. Christina Holmes, the city's director of finance, said the first debt-service payment will be due in March 2026 and that $1,722,828 is needed for that payment. Staff said savings are projected to grow each year and that confirmed savings should fully cover the lease payments by about fiscal year 2036.
Guarantee and risk: Staff described a measurement-and-verification process and a contractual performance guarantee from Climate Tech. As summarized by staff, the agreement requires Climate Tech to measure savings annually; if savings fall short the company must install additional measures at its own cost and, in a worst-case shortfall, pay the city the shortfall amount.
Schedule and grants: Staff said financing was scheduled to close on August 28 and that procurement and construction activities would begin in September with a 24'36 month implementation window for all measures. Staff said the city would pursue grant funding and federal incentives where eligible (staff estimated up to roughly $3.5 million in Inflation Reduction Act incentives for solar and EV charging if qualifying deadlines are met).
Vote and next steps: The council's motion to adopt the resolution and authorize the financing passed 4-0 (Mayor White and Councilmembers Fitzgerald, Joe Garcia and Christian Garcia voted yes). Staff said they will hold a project kickoff with departments and proceed with final design, permitting and procurement.
