CC WORKSESSION 04082008 - Laserfiche WebLink

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MEMORANDUM DATE: April 2, 2008 TO: Mike Morrison, City Manager FROM: Roger Larson, Finance Director ITEM: JOHNSON CONTROLS — FACILITY IMPROVEMENT PROJECT Johnson Controls has presented three options for Council consideration to upgrade and improve the energy efficiency of city buildings. Council has decided to revisit Option C at a cost of $1,999,082 with an annual P/I payment of approximately $178,938. Key components of the project funding include: 1) Energy savings (Guaranteed performance savings by Johnson Controls) 2) Operational savings (Budget reductions redirected to annual P/I payment) 3) Owner capital (Additional annual Capital City needs to provide) Energy savings is comprised of reduction in actual utility costs (electric, heat, etc.) Operational savings is a reduction in the current maintenance costs associated with maintaining the current buildings as they are now versus the maintenance costs after the improvements have been made. Owner capital is the amount of funding necessary that the City will have to dedicate to do the project. Since there is no current budget for this capital expenditure, a funding source must be established to balance the project. The following are potential financing options available for funding the Johnson Controls project: 1) Select Option C based on establishing a levy for the amount of owner capital. a. Annual Levy =$ 69,553 2) Incorporate the annual cost of owner capital into the current capital equipment budget. Changes to the capital equipment budget could include: a. Incorporate the annual owner capital costs into the current capital equipment budget by permanently inserting this line item into the budget.