Last night the Council discussed several significant items:
- We met in closed session to discuss labor negotiations related to City Manager candidates. There remains no reportable action however I am optimistic with the progress we are making.
- On the consent calendar was an updated investment policy. It did not reflect the changes that were discussed at a previous Budget/Audit Committee meeting so we tabled this item to be brought back after it could be further modified.
- We agreed to entered into Phase II of our agreement with Climatec, contingent on the City securing funding for the project. The project will include a number of energy and cost efficiency elements including: solar arrays that will power all of the City's buildings, in addition to providing shade structures for city vehicles; new lighting across our buildings, parks, and streets; new HVAC systems at Endeavor, the Library, and the Maintenance Building; Building automation systems controlling utility usage, EV charging stations at the Library, and irrigation control systems with master valve flow meters to shut off water flow in the event of a breakage.
All of these things combined will cost approximately $2M, with an overall savings of $4.7M over the life of the equipment. At our last meeting, we approved the application to the California Energy Commission (CEC) for an energy efficiency loan. The CEC credit facility is designed for local governments and is offered at a 1% interest rate. While there are potentially other funding options, the CEC credit facility is the most favorable and we should hear back regarding our application sometime in May.
It was important to approve moving to Phase II as that allows the City to submit an application for the solar array. Doing so now allows the city to take advantage of the current NEM 2.0 rules that are in place now, grandfathered for 20 years. These rules provide a certain buyback rate from PG&E for energy generated via solar arrays. Later this month, NEM 2.0 will be discontinued and going forward the buyback rate will be significantly lower. Being able to take advantage of NEM 2.0 contributes approximately $500K in value to the city over the life of the project.
If we move forward, the this project will complete in approximately 1 year.
- We received a mid year budget update. While the FY23 (July 1, 2022 - June 30, 2023) budget had a $127K deficit that was made up with reserves, at the mid year we are currently projecting higher than anticipated revenues of $82K, and reduced costs of $84K primarily from staff vacancies. This is approximately $166K favorability as compared to the adopted budget.
Staff is currently working on the FY24 budget and will incorporate this information as they proceed. I emphasized the importance of also preparing a more forward looking projection so we have better information from which to make more strategic spending decisions.
- We then discussed in greater detail requests from staff for one time items in order to make their work more efficient. While we had heard some of these before, staff was able to prioritize their requests and give more background as to the benefits each would provide. These items ranged from online portals to facilitate management and payments for business licenses and facility rentals, to software for managing meeting agendas, to maintenance equipment that would alleviate a lot of the manual work that is done all over the city, to security enhancements to City Hall.
While it is true we need to think holistically about our spending priorities, there are things that were identified by staff that are consistent with the goals established in the prior year, and will yield a significant benefit to staff in terms of efficiency and risk mitigation. This is also consistent with how we treated the Climatec agreement that I discussed above - incremental activities that will yield efficiencies.
There was some hesitation regarding making spending decisions without a view towards other potential needs. It will always be true that more information may be available at a later time, however this could lead to a type of analysis paralysis where no action is taken. Rather than continue waiting, I think we should take those steps we know need to be done so we can continue making forward progress.
We did not take specific action on this last night as several of the items needed more analysis before proceeding. I've asked staff to come back at our next meeting with those things that can be done immediately, and certain items that may require more analysis that the Council can then take action to direct how we move forward.
- We decided to cancel the first meeting in both July and September as has been our regular practice. These align with the 4th of July and Labor Day holidays.
