City Council Minutes 2010 12 07 - Laserfiche WebLink

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City Council Meeting Minutes December 7, 2010 Page 7 of 10 Public Works Director Phare reported on solar power proposals, which include options to lease the solar power equipment. Staff pursued possible solar power projects under an agreement format requiring the City to have a relationship with the design /build entity and a separate relationship with an equipment lease entity. Louisville's solar power projects would be eligible for rebates from Xcel for installing renewable energy generating capacity, and renewable energy credits from Xcel for reducing loads on the electrical grid. Three agreements would be necessary to construct solar power generating facilities at the City's utility plants through an equipment lease structure. The first agreement would be with Bella Energy for the design and installation of the solar power generating facilities at the City's utility plants in the amount of $1,330,000. The second agreement is an Equipment Lease Agreement, which provides the financing of the solar power project by Zions Credit Corporation and obligates the City to pay annual lease payments. The third agreement is a Progress Funding Agreement with Zions Credit Corporation to satisfy the safe harbor requirement. It is important for the solar power equipment to be clearly identifiable as an asset owned by the leasing company in order to secure the federal tax incentives. Provisions of the Progress Funding Agreement allow for meeting the safe harbor requirement to optimize tax incentives with a contingency, should the equipment lease not become effective. The Progress Funding Agreement requires the City to pay interest costs during construction. Bella Energy has agreed to absorb those costs within their agreement up to a maximum of $7,500. Because of the safe harbor requirement, it is necessary to enter into an agreement with Bella Energy prior to the equipment lease ordinance being effective. This agreement is associated with solar power equipment acquisition and installation, which must be incurred by year's end. Staff requested Resolution No. 75 and 76, Series 2010 be continued to the next City Council meeting, December 21, 2010. PUBLIC COMMENT John Dallapiazza, Bella Energy, 400 S. Author Avenue, Suite 500, Louisville, CO stated his financial projections are different from those presented by Public Works Director Phare. He felt the Public Works Director's projections were too conservative with respect to the return on investments. He presented a spreadsheet, which illustrated his projection for the return on the proposed solar project investment. He noted the life of a solar system is more than 20 years and averages between 35 to 40 years. He projected for the first four years the project would show a negative gain, but a positive gain after the five -year buyout of the solar system operations. Michael Menaker, 1827 Choke Cherry Drive, Louisville, CO expressed his concern over the proposed solar system project and cited several new technologies, which quickly