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sr-101282-11aGSiSES:NB:JAS Council Meeting: October 12, 1982 Santa Monica, California T0: Mayor and City Council 'fl~T_~ ~~~2 FROM: City Staff SUBJECT: Solar Water Heating for Municipal Pool Introduction This report presents the results of a request for bids to supply solar water heating for the Municipal Pool and recommends rejection of all bids and a waiver of the bidding requirements due to insufficient number of bids received. Background The City owns and operates the Municipal Pool facilities located at Santa Monica College (the School District owns the land and surrounding College buildings). Pool facilities consist of an Olympic size swimming pool and a diving pool, with a combined total pool surface area of 10,230 square feet. Pool heating and most other operational costs are paid by the City Recreation and Parks Department. The College reimburses the City for their proportion of pool use (approximately 51%). The total cost of pool heating (provided by natural gas) during FY 1981-82 was $26,794. Two consultant reports have been .prepared for the City, and staff analysis indicates that solar water heating would be a cost-effective energy saving investment for the City andtlthe College. Although a solar system would be a cost-effective investment, neither the College nor the City Recreation and Parks Department I/®/~! 1 ®CT 1 2 1982 GS:'SES:N'B:JAS Council Meeting: October 12, 1982 Santa Monica, California have funds budgeted for a solar system this year. The College has expressed a preference for a solar lease arrangement or other arrangement which does not involve a large initial capital outlay. Bid Results Therefore, on August 23, 1982, City staff issued a request for competitive bids to Design and Construct a Solar Water Heating System and Supply Solar Water Heating for the Municipal Pool. The purpose of the request was to solicit bids for both 1) a "no capital outlay" arrangement, and 2) conventional lump sum bids to design and construct a system. The Notice Inviting Bids was published August 23, 24, and 25, 1982, in accordance with Legal requirements. Specifications were issued to 20 contractors. Two bids were opened and read publicly by the Deputy City Clerk after 3:00 P.M. on September 21, 1982, as follows: Nadar, Inc... ...............$184,800 {Lump Sum) (La Puente, CA) Planned Energy Int'1, Inc......Percentage of avoided cost (Newport Beach, CA) per month for 84 months, per attached contract ("No capital outlay") The two bids are very different. Nadar Inc. submitted a bid to design and construct a solar water heating system for a lump sum of $184,800. Planned Energy International, Inc. (PEI) bid a "no capital outlay" energy saving arrangement with qualifications. Monthly payments would be based on a percentage of the avoided cost of the natural gas displaced by the solar system. This means 2 GS:SES:NB:JAS Council Meeting: October 12, 1982 Santa Monica, California that rather than making payments for a solar system directly, the City and the College would purchase the Btu's of solar energy supplied by the system at a price 22% - 50% below the price of natural gas. The City would have an option to renew the agreement or to purchase the system at its fair market value at the end of the seven-year period. The formula for determing the purchase price would be written into the contract. In their bid, PEI estimated the purchase price at $18,750 after seven years. Planned Energy International attached an agreement containing the schedule for calculating payments and containing other conditions and provisions. Based on the information submitted, it appears that the City and the College would realize substantial energy cost savings under this type of energy saving arrangement. The City Attorney has advised that Planned Energy International's proposed agreement and bid are not acceptable due to numerous qualifications in their proposed agreement. It is the opinion of staff that a fair agreement for energy saving services can be reached through direct negotiation. In order to negotiate contract terms, competitive bidding requirements must be waived. Staff wilt then solicit formal proposals from several firms including PEI which have proposed no capital outlay energy saving arrangements for the Municipal Pool and negotiate an agreement with the best proposer, subject to City Council approval. 3 6S:'SES:NB:JAS Council Meeting: October 12, 19$2 Santa Monica, California Recommendation Due to the suggested rejection of one bid by the City Attorney, and the insufficient number of bids received for this project, it is recommended that the City Council reject all bids, and waive further competitive bidding requirements for this project. It is further recommended that the City Council authorize the Gity Manager to solicit formal proposals for no capital outlay energy saving arrangements for the Municipal Pool and negotiate an agreement for energy saving services subject to Council approval. Prepared by: Stan Scholl Robert Myers Don Arnett Nina Byrne Attachment; Resolution for adoption 4