City Council Agenda and Packet 2015 10 06

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City Council Meeting Minutes September 15, 2015 Page 17 of 19 Council member Lipton asked if staff is recommending moving forward with this purchase. Public Works Director Kowar outlined the pros and cons. Pros: This is a very good opportunity. Cons: Staff has not had time to see the results of the first purchase to confirm all the variables and estimates are as accurate as possible. Council member Lipton asked for the risks of making this investment. Public Works Kowar explained Facility Manager Szabados has reviewed all the numbers. The risks are perhaps the solar garden is not as efficient as they envisioned or perhaps the electrical costs don't escalate as much. Other risks include better new technology that could outpace the saving this opportunity presents. City Manager Fleming explained based on the current assumptions on escalation of the cost of electricity and the efficiency of the panel, it could save the City half a million dollars over a 20 -year period. There may be new technologies, which may be better and save more money. Council member Lipton asked if staff is recommending the Council move forward. City Manager Fleming explained it took more time to finalize a contract, which makes staff hesitant. From his perspective as City Manager, saving $500,000 over a 20 -year period is good and recommended the City Council go forward. Council member Lipton asked if this is a type of market that could be put out for competitive bids, or would this be the only opportunity. Public Works Director Kowar explained Clean Energy is one of the leaders for a community solar garden and they are local. He stated Alpine Bank is the only one to bid for this financing and noted this is a very niche market. City Manager Fleming noted Clean Energy is a fast growing Louisville Company and expanding in other states. Ms. Thompson confirmed they are a Louisville Company located on Centennial Drive and have over 100 employees. She explained it was an arduous task to finalize the lease, but at this point, there is a full package of closing documents prepared by CEC. The only thing remaining is to review is the lease from Alpine Bank and close quickly. She noted with respect to an RFP process and the Xcel program, it would require ownership of a solar array and the land to put it on. Also there would not be a REC payment or on- demand charges. Council member Lipton addressed the CEC information suggesting a 20 -year investment of 117% and a 50 -year return of 863% and asked if the life of the assets would be 50 years. Ms. Thompson explained today's solar panels have a warranty of 25 years, but they are seeing a 35 -year life. The panels will be replaced as needed. The transformer will probably have to be replaced in 20- years. The REC payments help pay for the operations and maintenance. There is full insurance coverage on the array. There are safety features built in and they are going to try to run the operation for 50 years. They will be able to integrate with new and better technology. 35