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BACKGROUND The City's adopted Climate Action Plan includes a range of energy reducing goals, including those related to LED retrofit projects. In general LED conversion projects result in ongoing cost savings that have a positive impact on the City's General Fund in terms of expenditures, energy savings and reduced maintenance costs. The Bay Area Climate Collaborative, a group of the region's government, business, and non-profit organizations that creates common direction and accelerates ideas related to a "clean energy economy," has monitored the implementation of similar LED retrofit projects and noted an energy/cost savings of upwards of about 60%. In addition, conversion to LEDs reduces greenhouse gas emissions considerably and it's estimated that a conversion of the City's exterior lighting systems would reduce green house gases by approximately 1,556 metric tons per year. In view of these, savings, it was not a surprise that the recently completed ESCo audit identified the conversion of exterior lighting as a high priority/ high results project. DISCUSSION While the energy savings from LED conversion projects are considerable, they generally involve a significant up-front capital expenditure to complete. For this project, which would include all City street lights, park pathway lighting and miscellaneous exterior lights near public buildings, staff estimates the cost to be approximately $3.2 million. As with other energy savings projects completed recently, such as the OSC Photo Voltaic (PV) solar panel installations, staff attempts to leverage various governmental and private funding sources that minimize the impact on City financial resources. Also, staff has looked to spread the cost of these projects to a time line that relates to the overall period of energy savings. As an example, because the proposed LED lighting fixtures have an expected life span of 20 years, staff has sought funding sources with a pay-back term of less than this time. Based on the above, staff has identified two programs meet the financing criteria: • The California Energy Commission maintains a number of programs funded from various sources, including the federal government's American Recovery and Reinvestment Act stimulus funding, which are directed to capital improvements. The program recommended in this report, provides low interest loans to cities, counties, special districts, public schools and colleges, public hospitals, public care institutions to fund energy efficiency improvements related to lighting systems, LED conversions, pump and motors, building installation and other facility improvements. The interest rate on these loans is a fixed 1% and term of payment is 15 years. The loan repayment schedule is tied to the estimated annual energy cost savings from the aggregate energy project using energy cost schedules and estimates available at the time. The program is competitive and requires a program application and resolution from the agencies governing body. Funds are dispersed on a reimbursement basis. A standard loan agreement provided by the CEC is used for all loans. To date nearly $300 million has been allocated through this program. Page 2 of 4