City reviews $4.9M energy performance contract that would use guaranteed savings to retrofit 28 buildings

City staff and representatives of CMTA presented an energy performance contract proposal at the June 15 Pueblo City Council work session that would retrofit 28 city facilities and be financed primarily from guaranteed energy and operational savings.

CMTA engineers described the project scope as LED lighting upgrades across 28 facilities, solar photovoltaic arrays at roughly five sites, building-envelope improvements at key facilities (city hall, airport terminal, fire station one) and a near-complete renovation of the public works building. CMTA said the total scope of measures is currently estimated at about $4.9 million. Under the proposed structure the city would contribute approximately $430,000 in capital up front; the remainder would be financed and repaid from projected annual energy and maintenance savings of roughly $280,000 per year. CMTA stated it has a track record of meeting guaranteed savings on prior projects and said it would assume change‑order risk for the fixed-price work.

CMTA said the Colorado Energy Office serves as a third‑party verifier for measurement and verification of savings; project financing would likely be spread over about 20 years. Presenters noted additional funding sources that could reduce the city’s capital need: Black Hills electric rebates (CMTA estimated ~ $116,000 for LED work) and potential federal Investment Tax Credit refunds for solar (CMTA estimated nearly $600,000 if solar work is completed by the end of 2027). The project team said the audit phase cost about $125,000 and that the next step is a design phase for which CMTA would request authorization to proceed and for the city to determine how to cover design costs in the interim.

Councilors asked for more detailed cost and fee disclosure (several asked to see the 'all-in' numbers and the consultants’ fee structure including maximum profit/overhead). CMTA said overhead and profit were set in the competitive solicitation and that financing costs would be procured by the city to get the best rate. Councilors also raised procurement questions—local contractor participation, safeguards against sole-sourcing, and how warranties and maintenance will be handled. CMTA said it prioritizes local contractors, provides equipment and labor warranties (1–5 years on equipment, longer for solar), and can provide maintenance services if the city prefers, at additional cost.

Officials discussed financing mechanisms (certificates of participation, tax‑exempt lease/purchase, bank loans) and whether guaranteed savings are sufficient to cover financing escalations and utility-rate changes; CMTA said models include historical tariff escalation data and require a minimum positive cash flow per state guidelines. Councilors requested that CMTA and staff provide a detailed, line‑item cost and revenue model, the maximum fees embedded in the contract, and clearer information on how franchise-fee reductions (city utility franchise fee) might affect net city savings.