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Energy contract could save Durango over $500,000, but a funding source must be approved

City Council to consider options to pay for facility upgrades
Marty Pool, the city of Durango’s sustainability manager, looks over the old inefficient boiler in the basement of the Carnegie Hall building in November. Durango City Council is scheduled to hear updates to an energy performance contract being pursued with contractor McKinstry and possibly schedule a public hearing on financing the contract this April. (Jerry McBride/Durango Herald file)

Durango City Council is scheduled to hear updates on Tuesday about an energy performance contract that would package nearly 30 energy, water and solar efficiency projects at city buildings.

City Council will also decide whether to schedule a public hearing about financing the energy contract. City documents say without the council’s approval of a tax-exempt lease purchase financing agreement, the energy performance contract will be void of any funding source.

The energy performance contract is intended to aid the city in tackling various projects geared toward reducing the city’s carbon footprint, upgrade and maintain facilities while reducing energy use, and expand the use of renewable energy, according to a report prepared by staff for City Council.

The report says delaying funding for the contract would “significantly delay” progress toward meeting the city’s sustainability goals and the city will continue to pay higher-than-average utility costs for years – an estimated $170,000 in lost savings – before an alternative is identified and acted upon.

“Additionally, it is unlikely the City will be able to hit the adopted greenhouse gas (GHG) reduction and renewable energy goals by 2030,” the report says.

Marty Pool, city sustainability manager, said in November the energy performance contract stands to save the city more than half a million dollars in expenses and staff time that would be necessary to fund independent city projects covered in the contract.

The energy performance contract is with McKinstry, which will perform the contracted work on 26 projects in multiple city buildings simultaneously with no upfront costs to the city. Pool said a major benefit of entering the contract is that it allows the projects to be paid back over time using guaranteed energy savings.

He said the city’s payments for the projects are exactly offset by energy savings in the recommended tax-exempt lease purchase financing agreement. After the projects are paid for in full, the city will fully realize energy savings every month.

The contract price is $7,042,264, including a $138,000 contingency fund and $42,967 reserved for a verification process, the staff report says. A Colorado Department of Local Affairs grant of $1 million obtained by the city will reduce related project costs by 14%.

The report says alternatives to a tax-exempt lease purchase financial agreement are up-front appropriations from funds related to the various city facilities in need of upgrades; internal financing through an inter-fund loan from the water fund; or a combination of those and a tax-exempt lease purchase.

In November, four of five council members voted to direct the city manager to pursue an energy performance contract. Councilor Olivier Bosmans voted against the proposal, saying he supports mitigating climate change effects but he doesn’t support giving 40% of projected savings to consultants to see the contract through.

Several items have been added to the energy performance contract while several others have been removed, according to city documents.

Items added to the contract include:

  • Solar photovoltaics (solar panels) for the service and recycling centers.
  • Membrane roof replacement on the Durango Community Recreation Center and Service Center.
  • More solar maintenance services to be provided by McKinstry that are above city staff’s expertise and resources.
  • Water and shower fixtures replacements at the Durango Community Recreation Center.

Items removed from the contract are:

  • Reduced PowerED service scope, determined from City Council and public feedback.
  • Rooftop HVAC replacements at Durango City Hall.
  • Upgrades to lighting on the Animas River Trail to align with the city’s dark sky codes.


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