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SUBJECT: RESOLUTION NO. 48, SERIES 2023 <br />DATE: OCTOBER 10, 2023 PAGE 5 OF 7 <br />budgeted for equipment replacement at these buildings from 2027 — 2039. If a financing <br />option is preferred, the CIP funds can be reallocated towards option 2 or 3. <br />Option 2 reflects the near term recommendations without the onsite solar scope. <br />Without solar, utility savings are not realized, which increases the annual loan payment <br />annually. Additionally, grant funding is more readily available when projects include <br />resiliency aspects, such as onsite renewable energy. Option 2 assumes $1 M CEO <br />Public Building Electrification grant funding is secured, but no other grant funding. <br />Option 3 includes the near term recommendations with the onsite solar scope at seven <br />facilities. The full loan amount is $14,150,000 and utility cost savings are reallocated <br />towards loan payment through EPC. These savings are guaranteed and result in over <br />$61VI in savings during the loan term, which is applied annually to the loan payment, <br />decreasing the annual capital cost to the City. Option 3 assumes the 25% Inflation <br />Reduction Act (IRA) tax credit is applied to the project for reimbursement of onsite solar <br />and also assumes the City receives $51VI DOLA Climate Resiliency funding and $1 M <br />CEO Public Building Electrification funding. With both of these grant funding <br />opportunities, EPC projects are prioritized for funding. <br />Both options 2 & 3 assume a 16 year loan term and all numbers are subject to final <br />design, interest rates, lending terms, financing mechanism and savings analysis. <br />Additional costs, including solar operations and maintenance costs, will be evaluated by <br />staff, if given direction to proceed with option 3. <br />Council may also consider decreasing the scope of an EPC project to one site, such as <br />the Recreation & Senior Center, to decrease overall project costs. With the potential <br />DOLA grant funding and current capital, this project would not require financing but <br />could still be implemented through an EPC due to its robust scope which includes <br />energy efficiency, building electrification, EV charging and onsite solar. <br />FISCAL IMPACT: <br />Fiscal impacts related to the Internal Decarbonization Plan have already been <br />incorporated in the 2023 budget. $3 million has been budgeted in the Capital <br />Improvement Plan over 2023 and 2024 for implementation of the Internal <br />Decarbonization Plan. The project identifies longer -term planning for needs related to <br />electrification of City facilities, fleet and equipment. If the Plan is approved, staff will <br />address funding needs through the 2025-2026 budget process, for further discussion. <br />CITY COUNCIL OPTIONS: <br />Adopt the Internal Decarbonization Plan and explore implementation option 3, <br />near term improvements with solar, through the Colorado Energy Office's Energy <br />Performance Contracting (EPC) program and grant funding. <br />CITY COUNCIL COMMUNICATION <br />7 <br />