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savings was due in part to a 40 percent decrease in solar panel prices over the last six months. The original cost for the solar system for the OSC was estimated to be a total capital cost of $2,533,000 in April 2009. Staff prepared a net present value analysis for each component of the Project. Based on that analysis, the net present value (NPV) of the Well #8 system was $43,390 and was $(184,742) for the OSC system. When the two components of the Project are combined the NPV was $(118,397). Staff recalculated the NPV based on the final bid amounts now received and the combined system NPV is now $808,735. Original Project Estimate: $2,533,400 Combined NPV $(118,397) Recalculated NPV based On final bid received: $1,678,000 Combined NPV 808,734 As indicated above, the project is not currently budgeted and staff indicated previously that it would recommend funding once it received bids and analyzed the ownership and PPA options. Listed below are the recommended funding sources all of which will come from existing fund balances in the City's Capital Improvement Program (CIP). Solar Project Funding Sources CIP Water Replacement and Improvement Fund Balance 1,369,668 CIP Sewer Replacement and Improvement Fund Balance 102,778 CIP Capital Improvement Program Reserve (CIPR) 205,556 Total $1,678,000 The California Solar Initiative rebate will be $637,000 for this project and will help to offset the costs. Payments for the rebate are made on a monthly basis over a five year period following system installation. This would equate to $10,616 a month rebated to the City for five years. As a result, the net cost of the system less the rebate will be 1,041,000 total Submi -d Fiscal Review Approved b IF 4 �c v�iGti�` 71�x 2� Daniel S 'ith David P. Culver Nelson Fialho Operations Finance Director City Manager Services Director Attachments: 1. Recommended contract for Installation of a photovoltaic solar energy system Page 3 of 3