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THE CITY OF <br /> © CITY COUNCIL AGENDA REPORT 1 0 <br /> LEASANTON© <br /> March 20, 2012 <br /> Operations Services <br /> TITLE: AUTHORIZATION TO EXECUTE A LETTER OF INTENT FOR AN ENERGY <br /> AND ENVIRONMENTAL PERFORMANCE CONTRACT <br /> SUMMARY <br /> In August 2011 the City issued a Request for Qualifications (RFQ), for an Energy and <br /> Environmental performance contract through an Energy Service Company (ESCO) that <br /> specializes in turnkey energy and environmental projects. Performance contracts provide <br /> legal guarantees that the measures implemented in most cases cover 100% of the <br /> financing obligations, resulting in little to no out-of-pocket costs to the City. If the ESCO <br /> overestimates the projected savings, it will reimburse the City for the shortfall; however, if <br /> it underestimates the savings, the City retains the additional savings. <br /> Prior to issuing a contract, the ESCO needs to perform an investment-grade audit of city- <br /> owned facilities and infrastructure to determine the scope of work, potential savings, and <br /> total cost of project development, engineering, implementation, and measurement. The <br /> ESCO requires the City to execute a Letter of Intent, which provides the ESCO with a <br /> commitment that the City will not contract with another ESCO during this period, and that <br /> the City will reimburse the ESCO for the cost of the investment-grade audit if it chooses <br /> not to proceed with implementing the proposed measures. If the City proceeds with only <br /> some of the measures, it will be required to reimburse on a pro rata share of the audit <br /> based upon those measures it decides not to implement. <br /> RECOMMENDATION <br /> Authorize the City Manager to execute a Letter of Intent, in substantially the same form <br /> as provided with this staff report, with Honeywell Corporation to perform an investment- <br /> grade audit of City owned facilities and infrastructure. <br /> FINANCIAL STATEMENT <br /> The program development fee due to Honeywell Corporation for performing the <br /> investment-grade audit if the City chooses not to proceed with an energy performance <br /> contract is up to $177,000. This amount would be funded, if applicable, from contingency <br /> funds in the General Fund. If the City proceeds with an energy efficiency performance <br /> contract as a result of the investment-grade audit, then no payment by the City is <br /> required. <br />