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Council approves $112M energy‑savings performance contract to electrify city buildings and streetlights
Summary
Council unanimously authorized a 25‑year energy savings performance contract with Willdan to electrify 40 municipal facilities and retrofit ~39,000 streetlights, financed via a 25‑year TELP with Webster Bank; staff said avoided energy costs will repay financing and the project includes a 3‑year measurement & verification guarantee and planned reporting to council.
The Department of General Services presented Portfolio 1 of an energy savings performance contract (ESPC) that would electrify 23 buildings, remove over 100 natural‑gas systems, upgrade HVAC, install solar and battery storage at 17 sites, and convert about 39,000 streetlight fixtures to LED. The total construction scope presented was $112,000,000, to be financed through a 25‑year tax‑exempt lease purchase (TELP) with Webster Bank at an indicated interest rate of about 4.55%.
Staff described how avoided energy and maintenance costs would be used to repay financing and said the financing package assumes approximately $8,000,000 in Investment Tax Credit (ITC) receipts tied to solar installations. Willdan (the selected ESCO) performed investment‑grade audits and will provide a 3‑year post‑construction measurement and verification (M&V) and operations and maintenance guarantee; staff said Willdan will refund shortfalls in guaranteed savings during that period.
The Independent Budget Analyst highlighted risks: realized energy savings depend on future utility price trajectories; the ITC is programmatic and carries timing and policy risk; and long‑term O&M after three years will be the city’s responsibility. The IBA recommended annual reporting of estimated energy savings and debt payments in the budget documents.
Council questions covered warranties, the 3‑year guarantee, workforce and PLA coverage, interconnection with SDG&E, and timing to secure tax credits. Willdan and staff explained construction sequencing (streetlights prioritized to deliver early savings), warranties on equipment, and training for city facility staff during the 3‑year M&V period. Council added a reporting request and approved the contract and financing unanimously 8‑0 with one council member absent.
Next steps: staff will execute the TELP and ESPC, begin procurement and ordering ahead of ITC deadlines, deploy streetlight retrofits first to accelerate savings, and provide annual reports on energy savings and related debt payments.
