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AGENDA STAFF REPORT _.
IFOR
DATE: February 27, 2017
TO: Honorable Mayor and City Council
THRU: Jill R. Ingram, City Manager
FROM: Steve Myrter, P.E., Director of Public Works
SUBJECT: ENERGY EFFICIENCY CLIMATEC PROGRAM
SUMMARY OF REQUEST:
That the City Council:
1. Approve Resolution No. 6717 directing the termination of an
installation agreement with Climatec Building Technologies Group and
approving the execution of an Amendment to Lease Schedule #13 -030
and Memorandum Regarding Application of Remainder of Acquisition
Fund;
2. Authorize the Mayor to execute Amendment to Lease Schedule #13-
030 and Memorandum Regarding Application of Remainder of
Acquisition Fund.
BACKGROUND AND ANALYSIS:
At the July 25, 2016 City Council meeting, staff provided an update to the 2014
Energy Efficiency Project ( "Project'). Staff presented background information on
the Project which included acquisition and construction items that were
completed and those that were not. Based on an updated Project financial
analysis, staff recommended that there was insufficient financial justification for
purchasing Edison -owned street lights as had previously been proposed and
thus, staff started to research an alternative energy savings program. After
discussions with the City Council, staff received direction to not move forward
with the purchase of Edison owned street lights.
Previously, in May 2015, the City entered into a financing lease (the "Financing
Lease ") with Municipal Finance Corporation (which serves as the Administrative
Agent to City National Bank) for the Project. The Financing Lease was
structured with an annual interest rate of 3.40% and a final payment date of
November 8, 2025. Each semi - annual payment is $84,870.82. If paid in full, the
City would pay $1,893,455.86 in total (consisting of $1,546,930.82 in principal
(Project Cost) and $346,524.95 in interest).
Agenda Item I
At the October 24, 2016 City Council meeting, staff presented two Project
options. Option 1 was to not proceed any further with the equipment not yet
acquired for the Project and seek a restructuring of the Financing Lease to lower
the principal balance. Option 2 was for Climatec to present at the November 14,
2016 City Council meeting other energy savings projects to meet original energy
cost savings estimates.
At the November 14, 2016 City Council meeting, the City Council provided
direction to staff to start the process of restructuring the Financing Lease to lower
the principal balance and direct staff to not continue forward with any additional
acquisition under the Climatec Energy Efficiency Program.
Staff and the City Attorney's office have been working with the Municipal Finance
Corporation on the proposed restructuring of the Financing Lease, by using the
$612,639.31 of unspent financing proceeds to effect a partial prepayment under
the Financing Lease. Being presented to the City Council is an "Amendment to
Lease Schedule #13 -030 and Memorandum Regarding Application of Remainder
of Acquisition Fund" to document the prepayment and the resulting new payment
schedule under the Financing Lease. With City Council's approval, the
prepayment will take place on or about March 8m
ENVIRONMENTAL IMPACT:
There is no environmental impact associated with this item.
LEGAL ANALYSIS:
The City Attorney has reviewed and approved as to form.
FINANCIAL IMPACT:
The current principal balance of the Financing Lease in the amount of
$1,306,596.38 will be reduced to approximately $715,000 (after taking into
account a 1% prepayment premium and accrued interest to prepayment date).
The annual interest rate of 3.40% and the final payment date of November 8,
2025 will remain unchanged. The new semi - annual payment will be lowered to
approximately $46,000.
RECOMMENDATION:
That the City Council:
1. Approve Resolution No. 6717 directing the termination of the installation
agreement with Climatec Building Technologies Group and approving the
execution of an Amendment to Lease Schedule #13 -030 and
Memorandum Regarding Application of Remainder of Acquisition Fund;
2. Authorize the Mayor to execute Amendment to Lease Schedule #13 -030
and Memorandum Regarding Application of Remainder of Acquisition
Fund.
SUBMITTED BY:
Steve rer, P.E.
Director of Public Works
NOTED AND APPROVED:
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Prepared by: Michael Ho, P.E., Dep. Dir. PW /City Engineer
Attachments
A. Resolution No. 6717
B. Amendment to Lease Schedule #13 -030 and Memorandum Regarding
Application of Remainder of Acquisition Fund
"Attachment A"
RESOLUTION NUMBER 6717
A RESOLUTION OF THE SEAL BEACH CITY COUNCIL DIRECTING
THE TERMINATION OF AN INSTALLATION AGREEMENT WITH
CLIMATEC BUILDING TECHNOLOGIES GROUP (FOR EQUIPMENT
AND WORK NOT YET ACQUIRED THEREUNDER) AND APPROVING
THE EXECUTION AND DELIVERY OF AN AMENDMENT TO LEASE
SCHEDULE #13 -030 AND MEMORANDUM REGARDING
APPLICATION OF REMAINDER OF ACQUISITION FUND AND
TAKING RELATED ACTIONS
THE CITY COUNCIL OF THE CITY OF SEAL BEACH HEREBY FINDS,
DETERMINES, RESOLVES, AND ORDERS AS FOLLOWS:
Section 1. On April 28, 2014, the City Council adopted Resolution No. 6456,
approving the City's execution and delivery of contracts pertaining to the acquisition and
installation of multiple equipment to be installed in City facilities, to reduce or make
more efficient use of energy (the "Equipment "), and the financing of costs for such
acquisition and installation (the "Financing "), including: (i) an Installation Agreement,
dated as of May 8, 2014 (the "Installation Agreement ") by and between the City and
KX2 Holdings Building Technologies Group LP, dba Climatec Building Technologies
Group ( "Climatec "), (ii) a Lease with Option to Purchase # 13 -030, dated as of May 8,
2014 (the "Financing Lease "), by and between Municipal Finance Corporation
( "Municipal Finance "), as lessor, and the City, as lessee, and (iii) an Acquisition Fund
Agreement, dated as of May 8, 2014, dated as of May 8, 2014 (the "Acquisition Fund
Agreement "), by and among Municipal Finance, the City and Deutsche Bank, as the
custodian thereunder. While a portion of the Equipment has been acquired and
installed, based on a review of the progress under the Installation Agreement and an
evaluation of the portion of Equipment remaining to be acquired, the City Council
hereby finds and determines as follows:
(A) Based on an evaluation of the updated savings estimates (as
compared to the costs), the City has determined that it is in the City's best interest to not
proceed with the further acquisition of the Equipment for which the acquisition has not
been completed as of the date hereof.
(B) With respect to proceeds of the Financing remaining in the
"Acquisition Fund" held under the Acquisition Fund Agreement (in the approximate
amount of $600,000), it is in the City's best interest to apply such moneys to the
prepayment of "Rental Payments" (as such term is defined in the Financing Lease).
Section 2. Based on the finding and determination made in Section 1(A), the
City Council hereby authorizes and directs officers of the City take such other actions as
necessary or appropriate to terminate any further acquisition under the Installation
Agreement. The Mayor (or in the Mayor's absence, the Mayor Pro Tem) or the City
Manager, each acting individually, is hereby authorized to execute and deliver, in the
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name and on behalf of the City, such written instrument to effectuate or in furtherance of
such termination.
Section 3. At the time of execution of the Financing Lease, the City made
certain representations and covenants, with the intent that the interest components of
the Rental Payments would not be includable in gross income for federal income tax
purposes (i.e., that the Rental Payments would constitute "tax - exempt' obligations
within the meaning of Section 150 of the Internal Revenue Code of 1986, as amended
(the "Code "). In that connection, the City Council hereby makes the following findings
and determinations:
(A) On the date of issue with respect to the Financing, the City
expected that all of the proceeds of the Financing would be used to acquire the
Equipment.
(B) Contrary to the City's original expectations, the City has determined
to not proceed with further acquisition of the remaining portion of the Equipment and,
therefore, the remaining moneys in the Acquisition Fund are excess proceeds for
purposes of the Code.
Section 4. There has been presented to the City Council the form of an
"Amendment to Lease Schedule #13 -030 and Memorandum Regarding Application of
Remainder of Acquisition Fund," to be executed by and among the City, Municipal
Finance and City National Bank (the "Amendment "). In connection with the finding and
determination made in Sections 1(B) and 3, the City Council hereby authorizes and
directs as follows:
(A) The Amendment, in substantially the form on file in the office of the
City Clerk, is hereby approved. The Mayor (or in the Mayor's absence, the Mayor Pro
Tem) is hereby authorized, for and in the name and on behalf of the City, to execute
and deliver the Amendment, in substantially such form, with such changes therein as
the Mayor (or the Mayor Pro Tem, as the case may be) may approve (such approval to
be conclusively evidenced by the execution and delivery thereof).
(B) The City Council hereby approves and directs the re- allocation of
all of the remaining moneys in the Acquisition Fund to prepay Rental Payments under
the Financing Lease.
Section 5. The officers of the City are hereby authorized and directed, jointly
and severally, to do any and all things, to execute and deliver any and all documents
that they may deem necessary or advisable in order to effectuate the purposes of this
Resolution and the Amendment, and any such actions previously taken by such officers
are hereby ratified and confirmed.
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PASSED, APPROVED AND ADOPTED by the City Council of the City of Seal
Beach at a meeting held February 27, 2017.
AYES: Council members:
NOES: Council members:
ABSENT: Council members:
Sandra Massa - Lavitt, Mayor
ATTEST:
Robin L. Roberts, City Clerk
STATE OF CALIFORNIA )
COUNTY OF ORANGE ) SS
CITY OF SEAL BEACH )
I, Robin L. Roberts, City Clerk to the City of Seal Beach, hereby certify that the
foregoing resolution was duly adopted at a regular meeting of the City Council of the
City of Seal Beach, held on February 27, 2017.
Robin L. Roberts, City Clerk
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AMENDMENT TO LEASE SCHEDULE #13 -030
AND MEMORANDUM REGARDING
APPLICATION OF REMAINDER OF ACQUISITION FUND
This Amendment to Lease Schedule #13 -030 and Memorandum Regarding Application
of Remainder of Acquisition Fund and (this "Amendment "), dated March 8, 2017, is executed
by and among the City of Seal Beach, California (the "City "), City National Bank (the "Bank ")
and Municipal Finance Corporation (the "Municipal Finance "), with reference to the following:
(A) the Lease with Option to Purchase #13 -030, dated as of May 8, 2014 (the
"Lease "), by and between Municipal Finance, as the Lessor, and the City, as the
Lessee,
(B) the Lease Schedule #13 -030 (the "Lease Schedule "), relating to the Lease,
(C) the Acquisition Fund Agreement #13 -030, dated as of May 8, 2014 (the
"Acquisition Fund Agreement "), by and among Municipal Finance, the City and
Deutsche Bank, as the Custodian (the "Custodian "),
(D) the Assignment of Lease #13 -030 (the "Assignment "), providing for:
(i) Municipal Finance's assignment of its right, title and interest under the Lease
and the Acquisition Fund Agreement to the Bank, and (ii) the Bank's appointment
of Municipal Finance as the Administrative Agent under the Lease and the Bank's
attorney -in -fact for the purposes described therein.
Capitalized terms used but not otherwise defined herein have the meanings ascribed to them in
the Lease.
The City submitted to the Custodian a request (the "Final Disbursement Request ") to
transfer to the Bank, on behalf of the City, the full remaining balance of the Acquisition Fund, in
the amount of $612,639.31, for application toward a prepayment under the Lease. A copy of the
Final Disbursement Request is attached hereto as Exhibit A. The City has completed the
acquisition of a portion of the Property listed in Attachment A to the Lease Schedule. The City
has determined to not proceed with the acquisition of the remaining portion of the Property, and
therefore, will not make any request for further disbursements from the Acquisition Fund to pay
for the cost of acquisition of (or work relating to) the Property. Consistent with Section 4 of the
Acquisition Fund Agreement and Section 6 the Lease, the City submitted (and the Bank and
Municipal Finance have accepted) the Final Disbursement Request to provide for the application
of all remaining moneys in the Acquisition Fund towards the prepayment of future Rental
Payments.
The Bank hereby acknowledges the receipt of $612,639.31 pursuant to the Final
Disbursement Request and has applied such amount for a partial prepayment under the Lease, as
follows:
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Accrued interest (11/8/16 to 3/8/17):
Principal component of Rental Payments prepaid:
Prepayment premium (I% of principal)
Total:
This list of Property listed in Attachment A of the Lease Schedule is hereby amended as
set forth in Exhibit B hereto.
Attachment C to the Lease Schedule is hereby amended, with the schedule of remaining
Rental Payments as set forth in Exhibit C hereto.
Except as amended hereby, all other provisions of the Lease and the Lease Schedule
remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused their authorized
representatives to execute this Amendment.
CITY OF SEAL BEACH MUNICIPAL FINANCE CORPORATION
Title:
CITY NATIONAL BANK
Title: Vice President
:
Title: President
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EXHIBIT A
(Memorandum Regarding Application of Remainder of Acquisition Fund
and Amendment to Lease Schedule #13 -030)
Final Disbursement Request
(see attached)
A -1
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FINAL DISBURSEMENT REQUEST
To: Deutsche Bank, as Custodian,
under the Acquisition Fund Agreement, dated as of May 8, 2014 (the "Acquisition Fund
Agreement ") by and among Municipal Finance Corporation (the "Corporation "), the City
of Seal Beach (the "City ") and Deutsche Bank, as Custodian
Re: Lease with Option to Purchase dated as of May 8, 2014 (the "Lease "), by and between
Municipal Finance Corporation and the City of Seal Beach
With reference to the Acquisition Fund Agreement and the Lease described above, the
City hereby confirms to the Custodian that the City will not make any further request for
withdrawal from the Acquisition Fund for the cost of acquiring (or work relating to) the
Property. The Custodian has informed the City that the remaining balance of the Acquisition
Fund is $612,639.31. Pursuant to Section 4 of the Acquisition Fund Agreement and Section 6 of
the Lease, the City hereby requests the Custodian, on behalf of the City, to transfer all of such
remaining balance to the Bank for application toward prepayment of the Rental Payments:
Payee's Name and Address
Dollar Amount
Purpose
City National Bank
$612,639.31
Partial Prepayment
of Lease
ABA #122016066
Acct #101306674
Acct Name: Wire
Transfer Bank Control
Ref: Lease #13 -030
City of Seal Beach
Dated: 2017
CITY OF SEAL BEACH
Finance Director /City Treasurer
Disbursement of funds from the Acquisition Fund
in accordance with the foregoing Final Disbursement Request hereby is authorized
MUNICIPAL FINANCE CORPORATION
By:
Title: President
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EXHIBIT B
(Memorandum Regarding Application of Remainder of Acquisition Fund and
Amendment to Lease Schedule #13 -030)
Attachment to the Lease Schedule is hereby amended. The "Property" under the Lease and
the Lease Schedule shall consist the following:
CITY HALL /COUNCIL CHAMBERS
• Replace the existing thermostats with an Alerton Building Automation System (BAS).
The BAS will be a non - proprietary, networked energy management system tied to the
heating /cooling units that will provide substantial temperate control improvements and
ease of schedule changes. During occupied periods, heating and cooling set points will
be maintained with the user able to change set points within a preprogrammed amount.
Along with providing the City with additional scheduling and monitoring capabilities,
this energy conservation measure will also generate substantial energy savings, reduce
M &O expenditures and improve occupant comfort.
• Replace the electric controls on the multi -zone unit with new Alerton controls. This will
allow the BAS to operate this unit at optimal level of efficiency.
• Install CO2 based demand control ventilation on the multi -zone unit serving the City
Hall. Energy efficiencies will come from reduced cooling load due to lower outside air
flowing during unoccupied periods. This measure will also provide proper ventilation of
the occupied spaces.
• Retrofit existing lighting fixtures to the latest generation of T8 lamps and electronic
ballasts which will increase energy savings and provide longer lamp life. Please see the
attached lighting scope summary located in Supplemental Documentation for specific
locations and applications.
• Replace the existing incandescent lamps in the Council Chambers with new LED
technology. This will provide very good light quality, long life and instant start
capability. Please see the attached lighting scope summary located in Supplemental
Documentation for specific locations and applications.
• Replace the exterior lighting systems with high efficiency LED lighting that provide very
good light quality, long life and instant start capability. Please see the attached lighting
scope summary located in Supplemental Documentation for specific locations and
applications.
• Replace the existing incandescent lamps with new LED technology. This will provide
very good light quality, long life and instant start capability. Please see the attached
lighting scope summary located in Supplemental Documentation for specific locations
and applications.
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CITY YARD
• Replace the existing thermostats with an Alerton Building Automation System (BAS).
The BAS will be a non - proprietary, networked energy management system tied to the
heating /cooling units that will provide substantial temperature control improvements and
ease of scheduled changes. During occupied periods, heating and cooling set points will
be maintained with the user able to change set points within a preprogrammed amount.
Along with providing the City with additional scheduling and monitoring capabilities,
this energy conservation measure will also generate substantial energy savings, reduce
M &O expenditures and improve occupant comfort.
• Retrofit existing lighting fixtures to the latest generation of T8 lamps and electronic
ballasts which will increase energy savings and provide longer lamp life. Please see the
attached lighting scope summary located in Supplemental Documentation for specific
locations and applications.
• Replace the exterior lighting systems with high efficiency LED lighting that provide very
good light quality, long life and instant start capability. Please see the attached lighting
scope summary located in Supplemental Documentation for specific locations and
applications.
• Replaced (4) roof top packaging units with new high efficiency units of similar size and
capacity. The scope will include installation on the new units, electrical connections, and
start-up testing.
LIBRARY /SENIOR CENTER
• Replace (2) condenser coils with new high efficiency coils of similar size and capacity.
Complete a thorough check of the units and note deficiencies to the City staff.
MARINA COMMUNITY CENTER
• Install a dedicated, ductless split system unit for the art room. The scope includes the
necessary duct modification, disconnect/reconnect the existing electrical, condensate
connections, control connections and startup /testing of the new unit.
• Retrofit existing lighting fixtures to the latest generation of T8 lamps and electronic
ballasts which will increase energy savings and provide longer lamp life. Please see the
attached lighting scope summary located in Supplemental Documentation for specific
locations and applications.
• Replace the exterior lighting systems with high efficiency LED lighting that provide very
good light quality, long life and instant start capability. Please see the attached lighting
scope summary located in Supplemental Documentation for specific locations and
applications.
Ii
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• Retrofit the standard metal halide HID fixtures at the tennis courts with new generation
lower wattage pulse start metal halide lighting systems. Please see the attached lighting
scope summary located in Supplemental Documentation for specific locations and
applications.
NORTH SB COMMUNITY CENTER
• Retrofit existing lighting fixtures to the latest generation of T8 lamps and electronic
ballasts which will increase energy savings and provide longer lamp life. Please see the
attached lighting scope summary located in Supplemental Documentation for specific
locations and applications.
• Replace the existing incandescent lamps with new LED technology. This will provide
very good light quality, long life and instant start capability. Please see the attached
lighting scope summary located in Supplemental Documentation for specific locations
and applications.
• Replace the exterior lighting systems with high efficiency LED lighting that provide very
good light quality, long life and instant start capability. Please see the attached lighting
scope summary located in Supplemental Documentation for specific locations and
applications.
POLICE HEADQUARTERS
• Replace the existing thermostats with an Alerton Building Automation System (BAS).
The BAS will be a non - proprietary, networked energy management system tied to the
heating /cooling units that will provide substantial temperature control improvements and
ease of schedule changes. During occupied periods, heating and cooling set points will
be maintained with the user able to change set points within a preprogrammed amount.
Along with providing the City with additional scheduling and monitoring capabilities,
this energy conservation measure will also generate substantial energy savings, reduce
M &O expenditures and improve occupant comfort.
• Provide BAS control of manually controlled exterior lighting systems. This shall
improve building control, reduce electrical loads and reduce maintenance.
• Replace (18) roof top package units with new high efficiency units of similar size and
capacity. The scope will include installation of the new units, electrical connections, and
start -up /testing. Please see the mechanical replacement inventory for specific locations.
• Retrofit existing lighting fixtures to the latest generation of T8 lamps and electronic
ballasts which will increase energy savings and provide longer lamp life. Please see the
attached lighting scope summary located in Supplemental Documentation for specific
locations and applications.
• Replace the existing incandescent lamps with new LED technology. This will provide
very good light quality, long life and instant start capability. Please see the attached
H.
57296- 0001A2030145v4Ao
lighting scope summary located in Supplemental Documentation for specific locations
and applications.
SEAL BEACH LIFEGUARD PIER
• Retrofit existing lighting fixtures to the latest generation of T8 lamps and electronic
ballasts which will increase energy savings and provide longer lamp life. Please see the
attached lighting scope summary located in Supplemental Documentation for specific
locations and applications.
TENNIS CENTER
• Retrofit existing lighting fixtures to the latest generation of T8 lamps and electronic
ballasts which will increase energy savings and provide longer lamp life. Please see the
room by room lighting inventory for specific locations and applications.
• Replace the existing incandescent lamps with new LED technology. This will provide
very good light quality, long life and instant start capability. Please see the attached
lighting scope summary located in Supplemental Documentation for specific locations
and applications.
• Replace the parking lighting systems with high efficiency LED lighting that provide very
good light quality, long life and instant start capability. Please see the attached lighting
scope summary located in Supplemental Documentation for specific locations and
applications.
• Replace the exterior lighting systems with new sports lighting technology. Please see the
attached lighting scope summary located in Supplemental Documentation for specific
locations and applications.
• Install (1) fully automated, "Smart," weather based irrigation controller. This will
provide scheduling, alerts, and satellite control of the irrigation system.
BLUE BELL PARK
• Install (1) fully automated, "Smart," weather based irrigation controller. This will
provide scheduling, alerts, and satellite control of the irrigation system.
WINDSURF PARK
• Install (1) fully automated, "Smart," weather based irrigation controller. This will
provide scheduling, alerts, and satellite control of the irrigation system.
EISENHOWER PARK
• Install (1) fully automated, "Smart," weather based irrigation controller. This will
provide scheduling, alerts, and satellite control of the irrigation system.
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EDISON PARK
• Install (2) fully automated, "Smart," weather based irrigation controllers. This will
provide scheduling, alerts, and satellite control of the irrigation system.
STREET LIGHTS
Lighting, Scope LS -2
• Retrofit available HPSV and MV existing fixtures with new LED fixtures per the LS -2
inventory provided by SCE.
• Install Photo controls for LS -2 fixtures as identified by SCE.
FWA
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EXHIBIT C
(Memorandum Regarding Application of Remainder of Acquisition Fund and
Amendment to Lease Schedule #13 -030)
Amended Payment Schedule
(effective after prepayment on , 2017)
Payment Schedule: Payable semi - annually in arrears #13 -030
PMT Due Date Rental To To Purchase
# Payment Principal Interest Option
6 05/08/17
7 11/08/17
8 05/08/18
9 11/08/18
10 05/08/19
11 11/08/19
12 05/08/20
13 11/08/20
14 05/08/21
15 11/08/21
16 05/08/22
17 11/08/22
18 05/08/23
19 11/08/23
20 05/08/24
21 11/08/24
22 05/08/25
23 11/08/25 0.00
TOTALS:
C -1
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