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ITEM 3.9 Solar East WWTFe F 0tCI�go MINNrSOTA DEPARTMENT INFORMATION Request for City Council Action ORIGINATING DEPARTMENT REQUESTOR: MEETING DATE: Utilities Utility Manager Neidermeier July 27, 2020 PRESENTER(s) REVIEWED BY: ITEM #: Consent City Administrator/Finance Director Flaherty AE2S Engineer Schaefer 3.9 STRATEGIC VISION MEETS: I THE CITY OF OTSEGO: Is a strong organization that is committed to leading the community through innovative communication. X Has proactively expanded infrastructure to responsibly provide core services. Is committed to delivery of quality emergency service responsive to community needs and expectations in a cost-effective manner. Is a social community with diverse housing, service options, and employment opportunities. Is a distinctive, connected community known for its beauty and natural surroundings. AGENDA ITEM DETAILS RECOMMENDATION: City Staff is recommending City Council approve removal of the Alternate #2 (Solar Energy System) from the East WWTF Biosolids Building contract with Rice Lake Construction Group. ARE YOU SEEKING APPROVAL OF A CONTRACT? IS A PUBLIC HEARING REQUIRED? No No BACKGROUND/JUSTIFICATION: The Green Project Reserve (GPR) program was anticipated to provide 25-percent "principal forgiveness" for the solar portion of the project. The funding program was not able to access federal funding for this GPR, and GPR became contingent on the state bonding bill. The second state congressional special session adjourned without passing a bonding bill. The contractor has held the progress on the solar as long as possible without impacting the project schedule, so a decision is required whether to include or exclude the solar system within this project scope. The anticipated payback period was 15 years with the GPR funding and anticipated to be 20 years without the GPR funding. This topic was discussed at the Public Works Subcommittee on July 22, 2020, and the direction was to remove the solar from this project. The Biosolids Building will still be set up to accommodate a solar system. The likely scenarios will be to bid the solar installation as a stand-alone project, which is anticipated to improve the capital costs, or to consider a capital lease -back program, which is a more complex arrangement but does not require capital funding from the City. These alternative delivery methods will be revisited at a later time. SUPPORTING DOCUMENTS ATTACHED: 0 None POSSIBLE MOTION PLEASE WORD MOTION AS YOU WOULD LIKE ITTO APPEAR IN THE MINUTES: Motion to remove Alternate #2 (Solar Energy System) from the East WWTF Biosolids Building contract with Rice Lake Construction Group via change order. BUDGET INFORMATION FUNDING: BUDGETED: Fund 602 — Sanitary Sewer Utility Yes