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HomeMy WebLinkAboutagenda.council.worksession.20180814 CITY COUNCIL WORK SESSION August 14, 2018 4:00 PM, City Council Chambers MEETING AGENDA I. CORE Update II. Aspen Housing Partners construction lending P1 Page 1 of 3 MEMORANDUM TO: Mayor and City Council FROM: CORE - Community Office for Resource Efficiency Mona Newton, Executive Director THRU: Ashley Perl, Climate Action Manager DATE OF MEMO: August 10, 2018 MEETING DATE: August 14, 2018 RE: CORE Work Plan Update and REMP Resolution REQUEST OF COUNCIL: Staff is providing an update to City Council and a preview of the coming year. There is no formal request of council at this time. A resolution will be presented for council approval at a regular meeting on August 21, 2018. BACKGROUND: The Community Office for Resource Efficiency (CORE) was founded in 1994 as a result of the Energy 2000 conferences held years prior. The organization is a unique 501© 3 non-profit as it was founded with support of an interorganizational agreement signed by the founding entities: City of Aspen, Pitkin County, Town of Snowmass Village, Holy Cross Energy and KNEnergy (now Black Hills Energy). During the past 24 years CORE has been on the forefront tackling climate change with innovative and community accessible programs. Some of the programs have included: one of the first efforts to support renewable energy including one of the first solar rebates in the country, WindPower Pioneers program in partnership with Holy Cross Energy, and the Renewable Energy Program (REMP), which was developed in partnership with the Aspen/Pitkin County Community Development Department. CORE also works with municipalities to adopt policies that support sustainability such as the bag bans adopted by city of Aspen and voter passed initiative in the Town of Carbondale. On December 13, 1999, the Aspen City Council passed Ordinance No. 55 of 1999, which adopted the Renewable Energy Mitigation Program (REMP) as a component of the Aspen/Pitkin Energy Conservation Code. The program gives property owners the choice of mitigating energy use through the installation of on-site renewable energy systems, or paying an optional impact fee. CORE manages the funds collected through REMP, providing programs and incentives designed to address the impacts of the added energy consumption and reduce carbon emissions. Among a variety of other CORE initiatives, REMP revenues are used to fund an annual major grant cycle, known as The Randy Udall Energy Pioneer Grant, in honor of the late James “Randy” Udall, CORE’s founding director. These grants support government, non-profit, commercial and residential projects located within the Roaring Fork Valley delivering tangible results in carbon emissions reduction, energy efficiency and renewable energy generation. The Community Office for Resource Efficiency (CORE) is responsible for developing proposals for spending funds collected through REMP. Those proposals must be reviewed and approved by the CORE Board. The CORE Board of Trustees includes: George Newman (Pitkin County), P2 I. Page 2 of 3 Adam Frisch (Aspen), Dave Hornbacher (Aspen), Cindy Houben (Pitkin County), Dave Munk (Holy Cross Energy), Tom Goode (Snowmass Village), Auden Schendler (Basalt) and Bill Stirling (Energy 2000 Committee). For REMP expenditures, a resolution adopted by the Pitkin County Board of County Commissioners and a resolution adopted by the Aspen City Council is required for final approval of the proposed REMP expenditures. On August 8, 2018, the Pitkin BOCC unanimously passed the first reading of a resolution matching the funding authorizations outlined in the draft Council resolution (Attachment B). The BOCC will hold a public hearing and consider a second reading approval on August 22, 2018, following the Council action on August 21, 2018. DISCUSSION: In 2017, and into 2018, CORE has expanded the breadth of its work to support communities in Pitkin County (other than Aspen) by conducting carbon emissions inventories. With those inventories in hand, communities adopted goals for emissions reductions and climate action plans (Aspen had already adopted a reduction goal and Climate Action Plan). They also joined larger efforts including Colorado Communities for Climate Action and Compact for Colorado Communities. Roaring Fork Valley communities Carbondale to Aspen also updated building codes to 2015 IECC. Below are several highlights and accomplishments of CORE’s efforts in 2018: · Randy Udall Grants for 2019 – evaluation criteria emphasized energy savings · Emissions inventories – emissions reduction goals –emissions inventories to be updated in 2018 · Meeting with Pitkin County communities to discuss regional climate action synergies · Sustainable Building Symposium – Nationally recognized speaker discussing net zero building codes, opportunities · Basalt Vista Habitat project – technical and financial support for 27 net zero affordable homes · Support for 5MW solar project in Pitkin County · Outreach & Engagement - You are Powerful Campaign – local storytelling event, Changemakers Challenge · Hunter Creek – Affordable housing phase – nearing completion of boiler replacement and PV installation Thus CORE has begun using the adopted community goals as a lens with which to drive and support projects that help communities in achieving their goals and will continue to in 2019. The projects and programs recommended for funding this year will continue the movement toward achieving the goals defined in the City of Aspen’s and other communities’, climate action plans. They contribute to preserving a vibrant, healthy, and sustainable community by improving energy efficiency or adding renewable energy to the grid, thereby resulting in significant reductions in greenhouse gas emissions. CORE also continues its foundational programs that incent energy efficiency and renewable energy in the residential and businesses sectors partnering with the Climate Action Office in P3 I. Page 3 of 3 Aspen. Participation in these programs has remained steady year over year since their start in 2005. These programs reduce emissions in the buildings sector, the largest source of carbon emissions. In 2019 CORE will partner with the City of Aspen Climate Action Office and APCHA to develop an efficiency project that will target affordable housing, a large project identified in Aspen’s CAP. Planning for the project will take place later in 2018 and will be implemented in 2019. With the project scoped and the budget developed we will return to the city of Aspen and Pitkin County Commissioners seeking supplemental funding, if needed. The attached draft resolution of 2018 (Attachment B) details the projects and programs recommended for REMP funding by the CORE Board of Directors for a combined total of $2,585,958 in expenditures. As of July 22, 2018, the REMP Fund Balance, after subtracting the balance owed to CORE for 2018 and funds requested by the Climate Action Office, will be approximately $7,045,131. The CORE Board recommends approval of REMP funds to accomplish the programs in Attachment A. FINANCIAL/BUDGET IMPACTS: Funds collected through REMP will be used to fund the projects and programs, which will have no financial impact on the City’s General Fund. RECOMMENDED ACTION: No action is needed at this time. Staff and the CORE Board request Council approval of the Resolution, authorizing the expenditure of funds generated through REMP when presented to council during a regular meeting. ALTERNATIVES: If Council chooses not to approve the resolution the REMP funds would stay in the account and would be available for future renewable energy projects. CITY MANAGER COMMENTS: ______________________________________________________________________________ ______________________________________________________________________________ ATTACHMENTS: · Attachment A; 2018/2019 Grants and Programming · Attachment B; Draft Resolution P4 I. 1 Attachment B RESOLUTION NO. XX Series of 2018 A RESOLUTION OF THE CITY OF ASPEN CITY COUNCIL AUTHORIZING THE EXPENDITURE OF FUNDS GENERATED THROUGH THE RENEWABLE ENERGY MITIGATION PROGRAM WHEREAS, on December 13, 1999, the City Council approved Ordinance No. 55 Adopting the Aspen/Pitkin Energy Conservation Code, and WHEREAS, the Aspen/Pitkin Energy Conservation Code allows that funds collected through the Renewable Energy Mitigation Program (REMP) be spent in accordance with a resolution passed by the Aspen City Council and the Pitkin County Board of County Commissioners, and WHEREAS, at its meeting on July 19, 2018, the Board of Trustees of the Community Office for Resource Efficiency (CORE) approved the REMP spending proposals described herein, and WHEREAS, the City Council of the City of Aspen finds that the funding requests are appropriate. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ASPEN, COLORADO that the following REMP funding is approved, and the Community Office for Resource Efficiency (CORE) is authorized to negotiate and secure contracts and manage the installation and/or implementation of the following projects and programs: I. Projects supported by CORE Board of Directors for funding from REMP 2018/2019 Randy Udall Energy Pioneer Grant City of Aspen Installation of advanced meters to enhance EERE programs $200,000 $200,000 Farm Collective Carbon sequestration - energy savings based on kWh equivalence $51,000 $25,000 RFSD - Cardiff Mesa Efficiency + Electric IR heating + 32 KW PV system $63,458 $63,458 Roaring Fork Club 160 KW PV system - 63% offset $160,000 $110,000 TOSV - Town Hall Town Hall - 83KW PV System $174,000 $110,000 TOTAL $508,458 P5 I. 2 II. Programs supported by CORE Board of Directors for funding from REMP: · Community Grants ($100,000 requested) Community Grants aim to support a broad spectrum of environmental and energy projects with tangible results for the Roaring Fork Valley. The aims of Community Grants are to reduce energy consumption, reduce carbon dioxide (CO2) emissions, offset greenhouse gases, promote the use of renewable energy, educate the community on energy issues, and develop more sustainable energy technologies. Community Grants range from $1,000 – $10,000 and are awarded at the discretion of CORE’s Executive Director. · Design Assistance Grants ($80,000 requested) The Design Assistance Grant is made available to support commercial and institutional development projects in implementing integrative efficient design. These grants serve the purpose of promoting new technology and innovation during the design phase of new building construction. These grants are awarded on approval from CORE’s Executive Director. · Income-qualified Grant Program ($37,500 requested) The Income-qualified Grant Program continues to offer weatherization services to homeowners whose income levels are below 80% AMI (Area Median Income). In the past three years we have served over 100 households and have received matching funding from Energy Outreach Colorado to supplement the funding request. · Net Zero Homes Grant Program ($60,000) The Net Zero Homes Grant was started in 2016 and has seen solid participation. This program provides design advising services, and a tiered grant, up to $8,000 for a “net zero” energy use home, and is based on a final HERS rating. · Energy Smart Program (existing program, $660,000 requested) Residential Assessments $ 80,000 Quick Fix Items $ 10,000 Residential Rebates $310,000 includes energy efficiency and renewable energy Commercial Rebates $210,000 includes energy efficiency and renewable energy Small Lodge Program $ 50,000 P6 I. 3 CORE’s Energy Smart program continues to grow at a steady pace. This year we are proposing to include Big Buildings, Commercial and Residential under this one program category. Typically, the commercial sector represents approximately 50% of the energy consumption in buildings. CORE continues to offer incentives to the commercial sector and partners with City of Aspen Utilities and Holy Cross Energy to expand these efforts. With the Big Buildings program, we are able to help leverage the impact of our resources by offering larger rebates to owners of large buildings, which include public and private buildings and multifamily complexes. This program enables CORE to work directly with building owners and operators to help them move ahead with big energy savings projects. Funds will also be used to target multi-family unit complexes since many have sought out our services and we would like to be able to incent them to invest in a complete building retrofit for the greatest efficiency gains. The Small Lodge Program funding matches the city of Aspen’s funding. · Other Programs Climate Action Planning $ 50,000 Marketing & Engagement $ 90,000 New Initiatives $100,000 · Program Administration – $200,000 CORE staff administers all of the programs that CORE delivers. These funds support administration, and accounting. · Program Delivery - $700,000 Funds for program delivery includes costs associated with assessments including assignment, review, coaching, rebate processing, energy savings analysis, and reporting. Total Amount Requested: $2,585,958 P7 I. 4 P8 I. 5 INTRODUCED AND FIRST READ ON THE _______ DAY OF_______________, 2018 AND SET FOR SECOND READING AND PUBLIC HEARING ON THE ______DAY OF _______________ 2018. NOTICE OF PUBLIC HEARING AND TITLE AND SHORT SUMMARY OF THE For each of the recommended programs, specific guidelines and eligibility standards will be applied. CORE staff will continue to work closely with our partners to identify and reach targets with the greatest need and the greatest opportunity for improvement. I. This funding approval is effective upon a matching funding approval by the Board of County Commissioners of Pitkin County, Colorado. INTRODUCED, READ AND ADOPTED by the City Council of the City of Aspen on the ____ day of _________, 2018. _____________________________ Steve Skadron, Mayor I, Linda Manning, duly appointed and acting City Clerk do certify that the foregoing is a true and accurate copy of that resolution adopted by the City Council of the City of Aspen, Colorado, at a meeting held on the day hereinabove stated. _____________________________ Linda Manning, City Clerk P9 I. Attachment A 2018/2019 Grants and Programming 2018/2019 Randy Udall Energy Pioneer Grants CORE received 8 Randy Udall Energy Pioneer Grant applications, seeking $1,129,458 in support this year. Five of these projects are recommended to receive Randy Udall Energy Pioneer Grants totaling $508,458. Completion of the recommended 2018/2019 Randy Udall Energy Pioneer Grant projects is estimated to eliminate, or avoid, 26,478 metric tons of carbon dioxide equivalent emissions over the life of the projects. The Randy Udall Energy Pioneer Grant application filing deadline was May 2, 2018. The requests were first reviewed and evaluated by the Citizens Grant Review Committee on May 22, 2018, using a set of criteria adopted by the CORE Board of Directors. The Committee’s recommendations were then forwarded to the CORE Board of Directors who discussed and concurred with most of the recommendations, and revised some. Please refer to the attached DRAFT Resolution for detailed descriptions of the 2018/2019 Randy Udall Energy Pioneer Grant projects recommended for funding from the REMP Fund. Furthermore, all of the 2018/2019 grant applications can be viewed in full at the following link: 2018/2019 Udall Applications. The following list includes all of the 2018/2019 grant applications received, and the funding status/recommendation being presented for consideration by the County Commissioners: 2018/2019 Randy Udall Energy Pioneer Grant Applicants Grant Applicant Project Memo Requested Recommended City of Aspen Installation of advanced meters to enhance EERE programs $200,000 $200,000 Farm Collective Carbon sequestration - energy savings based on kWh equivalence $51,000 $25,000 Four Winds Phase I of Net Zero Campus $200,000 - RFSD - Cardiff Mesa Efficiency + Electric IR heating + 32 KW PV system $63,458 $63,458 Roaring Fork Club 160 KW PV system - 63% offset $160,000 $110,000 TOSV - Mountain View II Mtn View Apts - 47KW PV system - 470% offset $114,000 - TOSV - Public Works Public Works - 69 KW PV system $167,000 - TOSV - Town Hall Town Hall - 83KW PV System $174,000 $110,000 $1,129,458 $508,458 P10 I. 2018/2019 REMP Programs CORE continuously works to increase adoption of energy efficiency and renewable energy across all sectors. CORE and our partners serve the residential and commercial market with rebates and technical assistance through a variety of programs. CORE proposes to continue offering Community Grants and Design Assistance Grants. This year we are requesting funding for 2018/2019. CORE would like to build on the success of our Income-Qualified Program, which serves low-to-moderate income homeowners. This year’s funding request reflects the continuing partnership with Energy Outreach Colorado, who now provides some funds to serve this very important market segment in the Roaring Fork Valley from Aspen to the Eagle County boarder along Hwy 82. · Community Grants ($100,000 Requested) Community Grants aim to support a broad spectrum of environmental and energy projects with tangible results for the Roaring Fork Valley. The aim of Community Grants are to reduce energy consumption, reduce carbon dioxide (CO2) emissions, offset greenhouse gases, promote the use of renewable energy, educate the community on energy issues, and develop more sustainable energy technologies. Community Grants range from $1,000 – $10,000 and are awarded at the discretion of CORE’s Executive Director. · Design Assistance Grants ($80,000 Requested) The Design Assistance Grant is made available to aid commercial and institutional development projects in implementing integrative efficient design. These grants serve the purpose of promoting new technology and innovation during the design phase of new building construction. These grants are also awarded on approval from CORE’s Executive Director. · Income-Qualified Grant Program ($37,500 Requested) This program offers assessments, and energy efficiency services to income qualified households, whose incomes are below 80% AMI (Area Median Income). · Net Zero Homes Grant Program ($60,000 Requested) The Net Zero Homes Grant was initiated in 2016, This program provides design advising services, and a tiered grant, up to $8,000 for a “net zero” energy use home, and is based on a final HERS rating. As HERS ratings come in, grant amounts may be lowered, so additional funding could be made available. P11 I. · CORE’s Residential and Commercial Programs ($660,000 Requested) Residential o Assessments $80,000 o Quick Fix Items $10,000 o Residential Rebates $310,000 includes energy efficiency and renewable energy Commercial o Rebates $210,000 includes energy efficiency and renewable energy o Small Lodge Program $50,000 CORE’s Energy Efficiency and Renewable Programs continue to grow at a steady pace. Typically, the commercial sector represents approximately 50% of the energy consumption in buildings. CORE continues to offer incentives to the commercial sector and partners with City of Aspen Utilities and Holy Cross Energy to expand these efforts. CORE will continue to leverage the impact of our resources by offering larger rebates to owners of large buildings, which include public and private buildings and multifamily complexes. This program enables CORE to work directly with building owners and operators to help them implement big energy savings projects. Funds will also be used to target multi-family unit complexes since many have sought out our services and we would like to be able to incent them to invest in a complete building retrofit for the greatest efficiency gains. · Other Programs · Climate Action Planning ($50,000 Requested) These funds will be used to assist the county and member communities in developing regional climate action tools. · Engagement & Marketing ($90,000 Requested) · New Initiatives ($100,000 Requested) The CORE Board and staff have discussed the development of a new initiative that would contribute significantly to the decrease of carbon emissions in the Roaring Fork Valley. These funds will be used toward that project. Any expenditure would be approved by the CORE Board of Directors. This year funds were awarded to the Basalt Vista Habitat Project to make that project net zero. · Administrative · Program Management ($200,000 Requested) · Program Delivery ($700,000 Requested) For each of the recommended programs, specific guidelines and eligibility standards will be applied. CORE staff will continue to work closely with our partners to identify and reach targets with the greatest need and the greatest opportunity for improvement. P12 I. Page 1 of 3 MEMORANDUM TO: Mayor and City Council FROM: Chris Everson, Affordable Housing Project Manager THRU: Barry Crook, Assistant City Manager DATE OF MEMO: August 10, 2018 MEETING DATE: August 14, 2018 RE: Aspen Housing Partners (AHP) Project Update and Proposed Construction Lending REQUEST OF COUNCIL: Aspen Housing Partners (AHP) project update and proposal to Council for the City of Aspen to perform construction lending for the project which would save the project approximately $400,000 in construction loan interest and loan origination fees. PREVIOUS COUNCIL ACTION: On January 9, 2018, Aspen City Council directed staff to move forward with application for 4% Federal + State Low Income Housing Tax Credits (LIHTCs) for the Aspen Housing Partners (AHP) project which will create a total of 45 affordable rental units with an average APCHA income category of approximately 1.9. On April 13, 2018, staff notified Council that those tax credits were awarded as requested. DISCUSSION: Project Status Update: In November 2016, staff outlined a project timeline for Council which showed the completion of entitlements in December 2017, with a tax credit award occurring in the first part of 2018 and with building permit applications being submitted shortly thereafter. The project is currently moving forward on the anticipated timeline. Tax credits were awarded in April, and building permit applications for all three sites have since been submitted. Building permits are anticipated for all three sites by mid-October, and once those are in hand, a financial closing will be needed to assemble funds for construction. More on that is included in the staff proposal below. The City of Aspen will be making a funding contribution for these 45 rental units. Based on the use of 4% Federal + State tax credits, the City’s funding contribution to the AHP project has been estimated for Council numerous times as shown below as well as the current status which is in process and not a final result: Date Estimate of City Contribution July 2017 $14.9 million January 2018 $14.2 million April 2018 $14.6 million August 2018 $16.0 – $16.6 million P13 II. Page 2 of 3 It must be stressed that this work is still in process. Staff and the AHP team are seeking every opportunity to make improvements, but based on current estimates, the increase since April to the City’s estimated contribution can be attributed as follows at this time: Low City Contribution: $16 million High City Contribution: $16.6 million Increase since April: $1.4 million Increase since April: $2.0 million $550,000 Decrease to funding sources: 75% attributable to first mortgage lending (loan based on aggressive operating income) 25% attributable to no DOLA grant and slightly lower state tax credit than anticipated $1,150,000 Decrease to funding sources: 90% attributable to first mortgage lending (loan based on conservative operating income) 10% attributable to no DOLA grant and slightly lower state tax credit than anticipated $850,000 Increase to project cost estimate 50% attributable to professional services 20% attributable to construction costs 15% attributable to legal fees 15% attributable to increased developer fee $850,000 Increase to project cost estimate 50% attributable to professional services 20% attributable to construction costs 15% attributable to legal fees 15% attributable to increased developer fee Values rounded to the nearest $50K Staff and the AHP team are prepared to display and discuss all of the above during the work session. Despite the estimated increase, there is some good news: • Less than 10% of total project costs have been spent to date so improvement is possible • There may still be opportunity to restore the higher level of first mortgage • Professional services estimate is conservative and could reduce some 10% to 20% • Construction estimate contains contingency, which could reduce by some 3% to 6% • Other areas of improvement will continue to be sought Staff and the AHP team will continue to work toward getting the City’s contribution to the project back below $16 million. Staff expects to have updated information in about two months. Staff Proposal - City as Construction Lender: Due to the timing of when the tax credit funding becomes available to the project, construction of the facilities will be funded using a combination of the City’s contribution to the project plus interim construction loans which get paid off when tax credit funds become available after the facilities are completed and occupied. It has been assumed for some time that the construction loans (most likely more than one) would be issued by a commercial bank, and in that case, the interest rates for the construction loans would cost the City nearly double what it would cost if the City were to use part of the cash balance in the 150 Housing Development Fund to perform the construction lending. The City recently performed a similar construction loan for the refurbishment/refinancing of Aspen Country Inn housing facilities. Although the construction loan(s) would be paid back to the 150 Fund with 2% to 2.5% interest, staff would need Council to approve a supplementary budget request to approve the use of additional funds for the interim construction loan(s). Council has previously approved $17 million P14 II. Page 3 of 3 in the existing budget for the City’s contribution to the project, and the table below shows the supplementary budget authority which would be needed to also perform the construction lending: AHP Current Budget Total Needed +Budget Authority 3-Site Total, 45 Units $17 million $26.5 million +$9.5 million* * Currently available in the 150 Fund balance and to be paid back to the with 2% to 2.5% interest The proposed construction lending does introduce additional risk for the City, so each construction draw will need to be approved by staff based upon site inspections and third -party completion reports each month as the process moves forward. This includes the City’s ability to verify quality assurance during the process and control the flow of cash to be commensurate with construction completion put in place each month. If Council can agree now in concept to the proposed construction lending, then staff will submit the proposed construction loan term sheets with a resolution on the consent agenda at the next regular City Council meeting. This will serve the purpose of memorializing Council’s intent to increase budget authority as described and will allow staff to offer the loans. FINANCIAL/BUDGET IMPACTS: The 150 Housing Development Fund currently has the additional fund balance needed to perform the construction lending. The subsidy per FTE noted in the April 2018 work session based on the actual 4% + State LIHTC award was about $250,000 per FTE. Based on the updated information at this time, the revised subsidy per FTE is about $280,000 per FTE. An extrapolated Fee-In-Lieu amount for an average APCHA income category 1.9 is approximately $325,000 per FTE. RECOMMENDED ACTION: Staff recommends that Council agree in concept to the proposed construction lending, and staff will submit the proposed construction loan term sheets with a resolution on the consent agenda at the next regular City Council meeting. CITY MANAGER COMMENTS: ATTACHMENTS: P15 II.