SR-10A (21)
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EPWM EPD CP SM tefrax2
Council Meeting October 28, 1997
Santa Monica, California
OCT 2 8 1997
TO Mayor and City Council
FROM City Staff
SUBJECT RecommendatIon to Hold a Tax and EqUIty FIscal ResponsibIlity Act
(TEFRA) Hearing on the InclUSion of the Ken Edwards Center and the
Airport Administration BUilding mto Phase Two of Southern California
Edison ENVESTs Energy Efficiency Demonstration Project and to
AuthOrize the City Manager to Execute TEFRA Documentation
INTRODUCTION
This report requests that City Council conduct a Tax Equity and Fiscal Responsibility
Act (TEFRA) hearing on the InclusIon of the Ken Edwards Center and the Airport
AdmInistratIon BUIldIng Into Phase Two of Southern CalIfornIa EdIson's ENVEST
proJect, an energy effiCiency demonstration project for City faCilities It also requests
that City CounCil authOrize the City Manager to execute the TEFRA documentation
BACKGROUND
In January 1997, City CounCIl approved Phase Two of an energy effiCiency
demonstration project With Southern California Edison's ENVEST Under the California
Public Utility Commission-approved ENVEST structure, Edison shareholders pay the
costs of energy effiCiency services for the project through a lease-purchase agreement
With the City The City uses most of the project's cost savings to pay back thiS capital
Investment by Edison over the term of the agreement
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After the payback penod IS
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OCT 2 8 1997
complete, the City will retain all savings from Increased energy efficiency for Its own
use Annual energy savings from the City facIlities retrofitted dUring Phase One of the
ENVEST project Will total $193,463 After the annual lease payment of $183,961 IS
made to ENVEST, the City will retain $9,502 each year The estimate for Phase Two IS
$330,000 The annual lease payment to ENVEST Will be approximately $44,000,
resulting In an annual savings of $10,800.
An energy survey of the City facIlities not retrofitted dUring Phase One of the ENVEST
project was completed and energy efficiency measures valued at over $330,000 have
been deemed to be of a high enough level of cost-effectiveness to be eligible for a
Phase Two ENVEST project Phase Two sites Include City Yards, Fire Stations 1 and
5, the Animal Shelter, Montana branch library, Ken Edwards Center, the AIrport
Maintenance Hangar and Administration BUildIng, Virginia Park Commumty Center,
MemOrial Park Gym and Arts BUilding, the Senior Center at Palisades Park, Joslyn
Park Community and Semor Center, Douglas Park Clubhouse, Woodlawn Cemetery
BUildIngs, and miscellaneous park restrooms
DISCUSSION
Southern CalIfornIa EdIson uses tax-exempt bond finanCing to fund the ENVEST
program The City's tax counsel has reviewed the sites to be Included In Phase Two to
ensure that the proposed City faCilities meet the Internal Revenue ServIce
requirements for uSing tax-exempt funds for the Improvement of City faCIlities Two
Sites, the Ken Edwards Center and the Airport Administration BUilding, lease space to
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nonprofit organizations at a use rate slightly higher than the 5 percent threshold
permitted by the Internal Revenue Service The City's tax counsel advised that to
Include those sites Into the proJect, a TEFRA hearing must be held by City Council for
the purpose of Informing the public that the City plans to use tax-exempt financing for
energy efficiency Improvements at the Ken Edwards Center and the Airport
Administration BUilding In excess of the five percent allowable threshold and to allow
the public to prOVide Input Into that decIsion The TEFRA hearing permits the City to
exceed the 5 percent limit on leaSing rental space to nonproflts and comply with
Internal Revenue Services requirements A public notice on the TEFRA heanng
appeared In The Outlook on October 14
The Ken Edwards Center and the Airport Administration BUilding energy efficiency
Improvements comprise approximately $78,700 of the $330,000 total costs of the
Phase Two project Energy savings Will exceed $8,000 each year for those sites The
Ken Edwards Center leases space to Wise Senior Services and the Senior Health and
Peer Counseling Center on a year-round baSIS to prOVide a Wide range of senior
services Angel's Flight, a nonprofit organization comprised of volunteer pilots who
transport people In medical and financial need, leases space at the Airport
Administration BUIlding
BUDGET/FISCAL IMPACT
There IS no budget or fiscal Impact resulting from City Counsel conducting a TEFRA
hearing on Phase Two of the proposed Southern California Edison ENVEST energy
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efficiency prOject Potential energy cost savings for the Ken Edwards Center and the
Airport Administration BUilding are estimated to total over $8,000 per year
RECOMMENDATIONS
Staff requests that City Council conduct a TEFRA hearing and ask for public comment
on the Inclusion of the Ken Edwards Center and the Airport Administration BUilding into
Phase Two of Southern California Edison's ENVEST project It also requests that City
CounCil authonze the City Manager to execute all documentation necessary to
memonallze the results of the TEFRA heanng
Prepared by Craig PerkinS, Environmental and Public Works Management Director
Susan Munves, Conservation Coordinator
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