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    22.    
City Council Regular
Meeting Date: 04/10/2018  

SUBJECT:
ENERGY SERVICES CONTRACT WITH TANKO STREETLIGHTING, INC.
RECOMMENDATION:
  1. Conduct a Public Hearing
     
  2. Adopt a Resolution entitled:    A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHINO HILLS, CALIFORNIA, APPROVING A CONTRACT WITH TANKO STREETLIGHTING, INC. IN THE AMOUNT OF $1,316,128.79 PURSUANT TO CALIFORNIA GOVERNMENT CODE SECTIONS 4217.10 THROUGH 4217.18  FOR THE DESIGN AND CONSTRUCTION OF ENERGY EFFICIENCY IMPROVEMENTS AND MAKING CERTAIN FINDINGS  INCLUDING THAT THIS PROJECT IS EXEMPT FROM REVIEW UNDER THE CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) PURSUANT TO SECTION 15301 OF THE CEQA GUIDELINES.
     
  3. Amend the Fiscal Year 2017-18 Capital Improvement Program project “Acquisition of Streetlights from SCE” number S17010, to add the conversion of new City-owned streetlights to Light Emitting Diode (LED). 
     
  4. Approve an appropriation increase in the amount of $1,316,128.79 from the General Fund Unreserved Fund Balance to the Capital Improvement Project Fund for the audit, conversion, and one-year maintenance and repair costs of the newly acquired City streetlights. 
     
  5. Authorize Execution of an Agreement with Tanko Streetlighting­­­­­­­­­­­­­­­­­­­, Inc. in a not-to-exceed amount of $1,316,128.79 for services related to the audit/inventory of new City-owned streetlights, conversion of streetlights to LED, and maintenance and repair of streetlights for a one-year period.
BACKGROUND/ANALYSIS:
On February 14, 2017, Council approved a project to acquire an estimated 4,456 streetlights from Southern California Edison (SCE).  At that time, staff reported potential savings if the City converted the streetlights from the high pressure sodium (HPS) to LED, however, did not request funding for the conversion due to unknown factors. Council’s commitment of funding was an SCE requirement prior to submitting the application for sale to the California Public Utilities Commission (CPUC).  On August 30, 2017, the CPUC approved the sale. The City is currently waiting for SCE to perform a final field audit of the streetlights prior to the bill of sale for the assets.  
 
The City has 90 days from the bill of sale date to perform a condition assessment and confirm SCE’s inventory count.  The City will also need to uniquely tag each pole with a City-asset identifier and will add the inventory to the City’s Geographic Information System. In conjunction with the sale, the rates will be adjusted to reflect the reduction of SCE’s maintenance rate, saving the City approximately 40 percent over current costs. Staff is recommending contract services to perform this audit and conversion of assets as well as maintain the system.
 
Staff re-evaluated the prospect of immediately converting the HPS lights to LED when learning that SCE extended incentives for converting beyond the original December 31, 2017 expiration date.   Because of Council’s swift action, the City is in a good position to receive these rebates as well as realize a further reduction to the monthly energy cost of the streetlights.  The financial benefits are detailed in the following:
  • Purchase of Streetlights: Average annual SCE maintenance cost of $93.29 compared to $155.04 per pole for a total savings of $275,158.
  • LED Conversion:  An additional average annual savings of $43.32 per pole, depending on wattage, for a total savings of $193,034.
  • SCE Rebates: An estimated $60 to $70 per lamp rebate is offered by SCE depending on wattage totaling between $267,300 and $312,000.
To manage the audit, LED conversion, and maintenance, staff is recommending contract services with one provider to ensure consistency throughout the process and warranty period.  California Government Code Sections 4217.10 through 4217.18, was created to remove barriers to public agencies implementing energy conservation measures.  These statutes authorize the City Council to enter into an energy services contract for the implementation of energy related improvements if the City Council finds that it is in the best interest of the City and that the anticipated cost to the City for the  conservation services provided by the energy conservation facility under the contract will be less than the anticipated marginal cost to the City of the energy that would have been consumed by the City in the absence of those purchases.  In particular,  Government Code section 4217.16  permits public agencies with energy conservation contracts to select a contractor based on a request  for proposal process rather than a traditional public contract bidding process.
 
On December 22, 2017, staff issued a Request for Proposals (RFP) for streetlight audit, LED conversion and maintenance services
 
Four firms responded to the RFP. Staff evaluated the proposals based on the following:
  • Background and personnel: 15 percent
  • Project approach including technology employed by the contractor:  25 percent
  • References and ability to meet the schedule:  10 percent
  • Cost:  50 percent 
    Staff interviewed the top two firms, Siemens and Tanko Streetlighting, Inc. (Tanko). At the conclusion of the interviews and further post-interview evaluations, City staff is recommending Tanko to perform the identified work. Tanko demonstrated a clear understanding of the tasks to be accomplished, presented a concise proposal to the interview panel, and provided a cost proposal that confirmed the financial benefits to the City.
     
    Audit and Conversion Services
     
    Tanko’s analysis indicated that with the LED retrofit, the City can expect an annual savings of approximately $468,200 which is $103,500 more savings than the City originally estimated. Tanko has provided a cost proposal of $1,149,073.43 as a not-to-exceed price to perform all of the duties pertaining to the audit and conversion as identified in the scope of work. This cost includes a two percent variance for pole count and may be adjusted as a result of the “true-up” of the inventory of SCE streetlights to be acquired, which will also adjust the number of streetlights included in the conversion.
     
    Maintenance of the Streetlights
     
    In addition to the LED conversion of the streetlights, Tanko’s agreement includes a provision for the ongoing maintenance of the streetlights. Once the City owns the streetlights, and prior to the conversion to LED, the City will require Tanko to be available for ongoing maintenance of the existing HPS as well as the LED system. In the event of a LED light failure, Tanko will coordinate the replacement of the lighting fixture at no cost to the City during the one-year warranty period. The annual standby charge for a streetlight is $10.56, bringing the annual cost to $47,055.36 for standby charges.
     
    Additionally, in the event of a streetlight knockdown or other light outages, Tanko will respond and coordinate the repairs. Staff is estimating these unforeseen repairs at $120,000.  Typical repairs are the result of auto accidents that involve replacing the entire pole.  The City is usually successful in receiving compensation from insurance agencies for these types of repairs.  The total agreement for maintenance and repair is estimated at $167,055.36.
     
    Staff is recommending that Council approve an agreement with Tanko in the amount of $1,149,073.43 for the audit, conversion and true-up variance, and $167,055.36 for the maintenance and repair for a total agreement not-to-exceed amount of $1,316,128.79. 
ENVIRONMENTAL (CEQA) REVIEW:
The project is exempt from the California Environmental Quality Act (CEQA) pursuant to Section 15301 of the State CEQA guidelines because the streetlights are existing facilities and this project only consists of the operation, repair, maintenance, or minor alteration of existing public facilities involving negligible or no expansion of use beyond that currently existing.
FISCAL IMPACT:
This project was not anticipated in the fiscal year 2017-18 CIP budget and will reduce the General Fund Unreserved Fund Balance by $1,316,200. Once the purchase and LED conversion are completed and the rates are changed, the General Fund will be reimbursed for the initial investment through internal charge back to the appropriate cost centers on a pro-rata share basis (i.e. the various Landscape and Lighting Districts). Staff projects an annual net savings of approximately $468,200 due to lower energy and maintenance costs. It is anticipated that the City-wide savings will offset the conversion and initial streetlight acquisition costs in nine years, which is four years sooner than originally projected.
REVIEWED BY OTHERS:
This item has been reviewed by the Finance Director, the City Attorney, and the Contract Compliance Officer.
Attachments
Resolution
Agreement

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