Englewood studies $6.6 million municipal energy project; proposes $3.9M tax‑exempt lease, Malley Center as collateral

City staff and contractor Energy Systems Group briefed the Englewood City Council in a June 2 study session on financing options for a comprehensive municipal energy project that combines energy-efficiency upgrades and solar photovoltaic (PV) installations across city facilities.

Victor Rochelle, director of public works, and Kevin Ingalls, director of finance, said the full project cost is now estimated at about $6.6 million (down from a prior estimate of $6.75 million), with some grant funding reduced by state and federal cuts. Ingalls described a proposed financing package to cover roughly $3.9 million of that cost through a 20-year tax-exempt lease-purchase (TELP). He said municipal status allows tax-exempt financing similar to bonds and that advisors recommended tying a facility to the lease as security to obtain better market terms. Staff proposed using the Malley Center as the secured facility because it is slated to receive approximately $2.2 million in upgrades under the project scope.

Energy Systems Group’s presenter said the program bundles low‑ and no‑cost efficiency measures with larger upgrades (HVAC, envelope, water systems and solar) so energy savings fund more expensive replacements. The contractor told council the project is a “guaranteed energy project,” meaning the firm will pay the city the difference if measured energy savings fall short of the guarantee.

Council members sought details on risks, timing and alternatives. Member Russell asked whether the city could pay cash from the capital improvement fund; staff said large, simultaneous replacements would be difficult to execute using cash and that financing spreads the work over time. Member Ward pressed on legal and constitutional limits for multi‑year obligations and cited Article X, Section 20 of the Colorado Constitution (TABOR). Ward proposed that any drawn debt be paired with an encumbrance of reserves so the city both complies with TABOR’s conditions and shows the true funded position. Staff said the principal near‑term risk is that escalation or interest assumptions are wrong: the team used a conservative 4.4% interest assumption and NIST‑based escalation for energy costs, and the Colorado Energy Office informed the modeling assumptions. The presenter noted the Inflation Reduction Act funding could still apply if the city breaks ground by August; that timing factored into urgency to move quickly.

Members also questioned the choice of collateral. Member Wright asked why the Malley Center rather than the golf course enterprise (Bridal T); staff said the Malley Center receives more building‑related HVAC and envelope upgrades compared with solar‑heavy upgrades at the golf course and that the golf operations are in an enterprise fund with different accounting considerations.

No ordinance or financing agreement was adopted at the June 2 meeting. Staff said they would return with an ordinance and additional specifics — including maximum pricing and interest rate caps — in a subsequent council meeting (scheduled for June 23). The council discussion focused on risk management (reserve encumbrance, guarantee terms, grant timing) and on balancing immediate replacement needs against the long payback horizon for financing.