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HomeMy WebLinkAboutAdopt Resolution No 2015-85 authorizing the execution and de Dept ID AD-15-038 Page 1 of 2 Meeting Date 12/21/2015 CITY OF HUNTINGTON BEACH REQUEST FOR CITY COUNCIL ACTION MEETING DATE: 12/21/2015 SUBMITTED TO: Honorable Mayor and City Council Members SUBMITTED BY: Fred A Wilson, City Manager PREPARED BY: Ken Domer, Assistant City Manager Antonia Graham, Energy and Sustainability Projects Manager SUBJECT: Adopt Resolution No 2015-85 authorizing the execution and delivery of a California Lending for Energy and Environmental Needs Center Loan in an amount not to exceed $7,692,425 for the acquisition and retrofit of the City's streetlight system from Southern California Edison (SCE) Statement of Issue On October 19, 2015, the City Council was presented a Resolution authorizing Staff to submit a loan application to the California Infrastructure and Economic Development Bank (IBank) for the acquisition and retrofit of the City's streetlight system from Southern California Edison (SCE) On November 17, 2015, the (bank Board approved a loan through the California Lending for Energy and Environmental Needs (CLEEN) Center in an amount not to exceed $7,692,425 This Request for Council Action will formally accept the loan Financial Impact The City currently expends $1 8 million annually on Southern California Edison owned streetlights (energy costs plus operations/maintenance tariff) According to Siemens, the City's consultant, the total acquisition and retrofit project cost is $8 7 million After project completion, the Investment Grade Audit completed by Siemens estimates that the City will realize a cost savings of approximately $453,571 in the first year, with a total cumulative savings of$10 8 million over a twenty-year period A total of$3 million in potential General Fund support from the State's unwinding of the Triple Flip has been identified to help cover project costs It is recommended that the remaining $5 5 million be financed in whole or part by a loan from the California State Infrastructure and Economic Development Bank (Ibank) or other financing mechanism AS the City has not received the Triple Flip funding, which is expected to be released by the State on or about July 1, 2016, it is recommended that the maximum loan amount be accepted under an abundance of caution On November 17, 2015, the (bank approved a loan through the California Lending for Energy and Environmental Needs (CLEEN) Center for $7 692 million The loan will be used to finance portions of the streetlight acquisition, cutover (transfer of streetlights from SCE), and retrofit costs Average annual debt service is estimated up to $875,000 for a 10-year loan with an interest rate of 2 32% Future debt service payments will be appropriated in annual budgets Total principal and interest costs are estimated at $8 7 million over the 10-year life of the loan The total project cost (including financing costs) is less than not undertaking the project due to escalating SCE expenses in the street light class HB -197- Item 15. - I Dept ID AD-15-038 Page 2 of 2 Meeting Date 12/21/2015 Recommended Action Adopt Resolution No 2015-85, "A Resolution of the City Council of the City of Huntington Beach Authorizing the Execution and Delivery of a California Lending for Energy and Environmental Needs Center Loan in an amount not to exceed $7,692,425 " Alternative Action(s) Do not approve the Resolution and finance the streetlight program solely through other financing mechanism(s) at a higher interest rate Analysis The (Bank established the California Lending for Energy and Environmental Needs (CLEEN) Center to encourage public and private investments in clean energy projects This arm of (Bank seeks to fund energy efficiency projects The Ibank's Board approved a ten year, 2 32% interest loan in an amount not to exceed $7,692,425 in funding for the City's streetlight acquisition and retrofit project The streetlight acquisition and retrofit project is the first to receive a loan through the CLEEN Center On November 16, 2015 the City Council approved of the acquisition of the street lights to include the identified financial plan to include the CLEEN loan Environmental Status This project is categorically exempt from the California Environmental Quality Act (CEQA) under Section 15301 (existing facilities) because there is no expansion of service, light levels will remain relatively consistent, and there is no change in the number of light fixtures Strategic Plan Goal Strengthen economic and financial sustainability Attachments) 1 Resolution No 2015-85, "A Resolution of the City Council of the City of Huntington Beach Authorizing the Execution and Delivery of a California Lending for Energy and Environmental Needs Center Loan in an amount not to exceed $7,692,425" 2 Ibank Press Release Item 15. - 2 HB -198- RESOLUTION NO 2015-85 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH AUTHORIZING THE EXECUTION AND DELIVERY OF A CALIFORNIA LENDING FOR ENERGY AND ENVIRONMENTAL NEEDS CENTER LOAN IN AN AMOUNT NOT TO EXCEED $7,692,425 WHEREAS, the California Infrastructure and Economic Development Bank("IBank") administers financing programs to assist local governments with the financing of eligible projects in accordance with in Section 63000 et seq, of the California Government Code (the "Act"), and IBank created the California Lending for Energy and Environmental Needs Center ("CLEEN Center")pursuant to the provisions of the Act, and, IBank's Criteria, Priorities and Guidelines for the Selection of Projects for IBank Financing under the California Lending for Energy and Environmental Needs Center, approved on August 25, 2015, as amended from time to time (the "Criteria"), establishes requirements for the financing of projects pursuant to various programs under the CLEEN Center; and The City of Huntington Beach ("Borrower"), was awarded financing under the CLEEN Center in principal amount not to exceed $7,692,425 to finance the costs of acquisition and LED retrofitting of certain of the Borrower's street lights ("Project"), and The Borrower acknowledges that IBank intends to fund its various programs under the CLEEN Center, in part, with the proceeds of tax exempt bonds and, as such, expects to have certain compliance obligations that may require it to have the Borrower enter into new financing agreements to replace the Financing Agreements (the "Replacement Agreements") on terms and conditions substantially identical to the original Financing Agreements. NOW, THEREFORE, the City Council of the City of Huntington Beach does hereby resolve as follows. Section 1. The City Council hereby approves and affirms the actions of the Borrower's representatives heretofore taken with respect to submitting an application for financing for the Project, and in connection therewith finds and certifies that a The Project facilitates effective and efficient use of existing and future public resources so as to promote both economic development and conservation of natural resources. b The Project develops and enhances public infrastructure in a manner that will attract, create, and sustain long-term employment opportunities; c That the Project is consistent with the General Plan of the City of Huntington Beach, and any elements of the General Plan of Orange County that are applicable to the Borrower and the Project; 15-5018/128985 doc 1 Resolution No . 2015-85 d. The proposed financing is appropriate for the Project, e. The Project is consistent with the Criteria, and f It has considered(i) the impact of the Project on California's land resources and the need to preserve such resources; (ii) whether the Project is economically or socially desirable; (iii) whether the project is consistent with, and in furtherance of the State Environmental Goals and Policy Report (as defined in the Criteria), and (iv) whether the Project is in furtherance of the GHG Reduction Goals (as defined in the Criteria). Section 2. Pursuant to its resolution No. 2015-56 dated October 5, 2015, the Borrower previously declared its official intent to use certain proceeds of the Obligation to reimburse itself for expenditures reimbursable with the proceeds of tax exempt bonds or other tax exempt securities under the provisions of the Internal Revenue Code of 1986, as amended, and those U.S. Treasury Regulations implementing such provisions (collectively, "Federal Tax Law") This declaration was made solely for purposes of establishing compliance with applicable requirements of Federal Tax Law and its date is controlling for purposes of reimbursement under Federal Tax Law. Such declaration did not and does not bind the Borrower to make any expenditure, incur any indebtedness, or proceed with the Project. Section 3. The City Managei and his or her designee is hereby authorized and directed to act on behalf of the City of Huntington Beach in all matters pertaining to the acceptance of financing from the IBank, and the execution of related financial documents including, but not limited to,the authority pledge Borrower revenues to the repayment of the Obligation and to provide covenants relating to the Obligation and as to any other security or collateral securing the Obligation. Section 4 The City Manager and his of her designee is authorized to enter into and sign financing documents and any amendments thereto, including, but not limited to the Financing Agreements and the Replacement Agreements, with the IBank for the purpose of financing the Obligation Section 5. This resolution shall become effective immediately upon adoption. 15-5018/128985 doc 2 Resolution No . 2015-85 PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a regular meeting thereof held on the 21 s t day of December , 2015 IW44 Mayor REVIE D APPROVED. APPROVED AS ORM: ity Manager _City ttoxii�c }411�f I)+)E AN AP VED. ssistant City Manager 15-5018/128985 doc 3 Res. No. 2015-85 STATE OF CALIFORNIA COUNTY OF ORANGE ) ss: CITY OF HUNTINGTON BEACH I, JOAN L FLYNN the duly elected, qualified City Clerk of the City of Huntington Beach, and ex-officio Clerk of the City Council of said City, do hereby certify that the whole number of members of the City Council of the City of Huntington Beach is seven, that the foregoing resolution was passed and adopted by the affirmative vote of at least a majority of all the members of said City Council at a Regular meeting thereof held on December 21, 2015 by the following vote AYES: Posey, O'Connell, Hardy, Katapodis, Sullivan, Delgleize, Peterson NOES: None ABSENT: None ABSTAIN: None City Flerk and ex-officio Clerk of the City Council of the City of Huntington Beach, California Caftfornalnfrastructumand November 24, 2015 Eeonomw.Development Bank Contact City PIO Julie Toledo (714) 536-5577 or Alice Scott, alice.scott@ibank ca gov City of Huntington Beach to Receive First Project Financing Under California Lending for Energy and Environmental Needs (CLEEN) Center at (Bank -- City will benefit by saving energy and money with retrofitting 11,000 streetlights The City of Huntington Beach will be the first to receive a California Lending for Energy and Environmental Needs (CLEEN) Center project financing from the California Infrastructure and Economic Development Bank (IBank) IBank's Board approved a nearly$7 7 million low-interest loan for Huntington Beach's acquisition and retrofit of more than 11,000 streetlights with new Light Emitting Diode (LED)technology The anticipated annual energy savings from the LED project will be 3 5 million kilowatt-hours the first year, lowering costs and making money available for other services. IBank established the CLEEN Center in 2014 to finance energy efficiency and environmental projects in support of California's greenhouse gas reduction goals "We are ecstatic about Huntington Beach's LED project As the first project financed under our CLEEN Center, the IBank Board's approval is historic," said Teveia Barnes, IBank Executive Director. "This and future CLEEN projects will help the State meet its goals for reducing greenhouse gas emissions " The City of Huntington Beach's Energy Manager Antonia Graham is thrilled for the partnership "This is a great achievement for our City," said Graham "Providing streetlight services to the residents and businesses of Huntington Beach is an essential service This acquisition and retrofit represents a rare opportunity to improve the City's finances, infrastructure, light quality, and environmental footprint " The money saved from retrofitting these streetlights will, in the long run, be a benefit to Huntington Beach residents and businesses by saving between $10 million and $14 million over 20 years The City Council authorized the City Attorney to finalize contract negotiations with Southern California Edison, once completed the document will require approval from the California Public Utilities Commission (CPUC) The approval process with the CPUC could take anywhere from three to six months. Once approved by the CPUC the City will begin taking over and retrofitting 1,000 streetlights at a time. About the California Infrastructure and Economic Development Bank: IBank was created in 1994 to finance public infrastructure and private development that promote a healthy climate for jobs, contribute to a strong economy and improve the quality of life in California communities IBank is located within the Governor's Office of Business and Economic Development and is governed by a five-member Board of Directors IBank has broad authority to issue tax- exempt and taxable revenue bonds, provide financing to public agencies, provide credit enhancements, acquire or lease facilities, and leverage State and Federal funds Find more information at http//www ibank ca gov Item 15. - 6 1413 -202-