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SUBJECT: REVISIONS TO ENERGY SAVINGS PERFORMANCE CONTRACT,
PHASE IV, MUNICIPAL EQUIPMENT LEASE-PURCHASE AGREEMENT
INCLUDING REVISED INTEREST RATE AND FIRST YEAR GUARANTEED
SAVINGS
Due to financial market conditions, an increase in the interest rate (from 4.08% to 4.48%) for the
Municipal Equipment Lease-Purchase Agreement is required. By redistributing the finance
payments, this increase in the interest rate can be accommodated without any increase in total
principal and interest payments over the 15-year term, not of any and all associated fees. For
'lle annual cash flow • ESPC Phase IV to remain not-neutral in accordance with the law, JCI
increased •
their guaranteed savings in Year 1 after construction completion from $780,440 to
$944,814.
The revised financing plan was reviewed • the City's Financial Advisors at First Southwest
Company. All other items presented in M&C C-22868 remain the same.
As stated in M&C C-22868, this action will have no material effect on City funds during
08. The City Manager's proposed General Fund budget for FY2009-1 0 will recommend funds to
pay the lease-purchase agreement principal and interest, and the service contracts, for their
respective terms.
if you have any questions related to the information in this report, please contact Glenn Balog.,
Facilities Manager, Department of Transportation and Public Works, at 817-392-2028. -P"
City of Fort Worth, Texas
Mayor and Council Communication
COUNCIL ACTION: Approved on 6117/2008
DATE: Tuesday, June 17, 2008
LOG NAME: 20ESPCIV REFERENCE NO.: C-22868
RECOMMENDATION:
1. Authorize the City Manager to execute a Municipal Equipment Lease-Purchase Agreement in the amount
of $9,248,307 with Johnson Controls, Inc. (JCI) to finance the implementation of Phase IV of the City's
Energy Savings Performance Contract (ESPC) with JCI;
All
Authorize the City Manager to execute an Escrow Agreement with JCI and U.S. Bank National
Association as required by the Municipal Lease-Purchase Agreement; and
3. Authorize the City Manager to execute amendment No. 3 to City Secretary Contract No. 29110 with JCI
in the amount of $9,248,307 for implementation of the ESPC Phase IV project.
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The ESPC Phase IV project covers energy and water conservation measures to be installed at 90-City
facilities including 37-Fire Stations, 21 -Co mun ty Centem, and 11- ries. The scope of work includes
improvements to fighting, air conditioning, and HV control systems, as well as water conservation and
power factor correction improvements. Specific improvements include:
1,marne: 20ESPCIV Page I of 3
Resource Conservation Program project is provided through a Municipal Lease-Purchase Agreement of
$9,248,307 with JCl.
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JCI-guaranteed utility savings to the City will be used to pay any and all accrued principal and
interest. Progress payment requests will be paid upon City Construction Management review and approval
directly to JCI from a bank escrow account such that no outlay of City funds is required during the
construction period. The estimated date to begin lease payments is November 1, 2009.
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Current
• June 19, 2007, (M&C C-22189) City Council authorized execution • a contract with JCl to conduct
detailed study of major T/PW, Police, Fire, Public Health, P&CS and Library department facilities as
ow-on project to the successful ESPC Phases 1, 11 and Ill. The resultant Utility Assessment Rep
dated October 25, 2007, was reviewed and approved by City staff as well as by Kinsm
Associates, retained • the City as a 3rd-party reviewer. The project scope includes lighting, ai
conditioning, plumbing, and electricity system improvements in 90-City facilities totaling over 1.OM-squa
feet in area. To the extent possible, available utility incentives will be pursued for this scope of work, wi
any secured funds directed to the recently-established Resource Conservation account within the Cifty
General Fund.
Logname: 20ESPCIV Page 2 of 3
are structured such that all project costs - debt service and service agreements - are fully offset by
guaranteed utility cost avoidance to the City on an annual basis. Previous ESPC phases were financed
through the Loan Saving Taxes and Resources (LoanSTAR) program of the Texas State Energy
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1@1 Conservation Office (SECO). With two current LoanSTAR loans totaling approximately $10M, the City no
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longer qualifies to participate in this program.
It is signcant to note that the recommended facility improvements will be required in the near future
regardless, as major system components are either at or near the end of their useful lives. If not included in
an ESPC, these improvements will require engineering design and construction on either a planned capital
project basis or an emergency failure replacement basis. Either above-stated option would likely cost more
to implement.
JCI is in compliance with the City's M/WBE Ordinance by committing to 19 percent M/WBE particip '
from the total award for construction and supplies. This commitment exceeds the City's 15 percent MZ1
participation goal for the project.
The ESPC Phase IV project involves improvements to City facilities located in ALL COUNCIL DISTRICTS.
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e Finance Director certifies that this action will have no material effect on City funds during FY2007-
08. The City Manager's proposed General Fund budget for FY2009-10 will include funds to pay the lease-
purchase agreement principal & interest, and the service contracts, for their respective terms.
• Fund/AccountMenters FROM FundtAccounMenteC
Submft-tpd for City Manager's 0WIce by: Fernando Costa (847
Originating Department Head: Greg Simmons (7863
Additional Information Contact: Glenn Balog (20 28)
Sam Steele (1276) •
L,ogname: 20ESPCIV Page 3 of 3