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AGENDA ITEM NO. 5A STAFF ORIGINATOR: Rick DeGardner, Public Services Director DATE: September 27, 2010 TOPIC: Consider Resolution No. 10 -84, Office of Energy Security Grant Award VOTE REQUIRED: Simple Majority BACKGROUND: The Public Services Department was recently notified that our grant application for energy improvements was selected for funding by the MN Office of Energy Security. The grant award is in the amount of $89,937 and requires a 50% match. The grant application consisted of three primary components: Civic Complex - Installing a high efficiency (94.6 %) boiler for primary heating loads /operations and utilizing the existing 78% efficient boilers for peak demand time only will result in approximately $7,800 in annual energy savings. Public Works /Senior Center - The current mechanical systems are 27 -30 years old and have reached their average life expectancy. Installing new high efficient furnaces and cooling equipment will result in annual energy savings of $2,925. Centennial Fire Station #2 - The current mechanical systems are approximately 19 years old Ilind have efficiencies in the 70% range. Installing new heating equipment will provide 95% efficient ratings and will result in annual energy savings of $2,371. The above projects will result in excess of $13,000 in energy savings annually with a payback term of 6.6 years. Staff is seeking approval to enter into an agreement with the State of Minnesota to execute the grant agreement. Staff recommends that the required matching funds be designated from the Municipal Buildings & Facilities Fund. OPTIONS: 1. Approve Resolution No. 10 -84, accepting the Office of Energy Security Grant Award and direct staff to execute the Grant Agreement with the State of Minnesota for energy improvements. 2. Do not approve Resolution No. 10 -84. RECOMMENDATION: Option 1. CITY CONTRIBUTION GRANT AWARD REBATES ENERGY SAVINGS/YEAR Civic Complex Boiler $36,450 $39,950 $3,500 $7,800 Public Works HVAC $26,989 $30,469 $3,480 $2,925 Centennial Fire Station #2 HVAC $22,999 $19,518 $1,740 $2,371 TOTAL $86,438 $89,937 $8,720 $13,096 The above projects will result in excess of $13,000 in energy savings annually with a payback term of 6.6 years. Staff is seeking approval to enter into an agreement with the State of Minnesota to execute the grant agreement. Staff recommends that the required matching funds be designated from the Municipal Buildings & Facilities Fund. OPTIONS: 1. Approve Resolution No. 10 -84, accepting the Office of Energy Security Grant Award and direct staff to execute the Grant Agreement with the State of Minnesota for energy improvements. 2. Do not approve Resolution No. 10 -84. RECOMMENDATION: Option 1.