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Home My WebLink AboutE-11 $1 Million Grant ApplicationCONSENT ITEM E-11 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL VIA: TROY L. BUTZLAFF, ICMA-CM, CITY MANAGER FROM: GEORGE F. MORROW, DIRECTOR OF UTILITIES DATE: JANUARY 3, 2017 SUBJECT: ADOPT RESOLUTION NO. 2017-C6 APPROVING SUBMITTAL OF $1 MILLION GRANT APPLICATION TO THE BUREAU OF RECLAMATION FOR ADVANCED METERING INFRASTRUCTURE PROJECT SUMMARY: In October 2015, the Azusa Utility Board authorized Staff to negotiate a contract for an Advanced Metering Infrastructure (AMI) project with Sensus USA. While Staff is in the final stages of completing contract negotiations, a grant opportunity arose to potentially obtain funding of up to $1 million from the Bureau of Reclamation for this type of project. The application requires that the City Council approve a resolution as part of the grant application process. The proposed action adopts Resolution No. 2017-C6 approving the grant application. RECOMMENDATION: Staff recommends that the City Council take the following actions: 1) Adopt Resolution No. 2017-C6, titled: A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA, CALIFORNIA, APPROVING THE APPLICATION FOR GRANT FUNDS FOR THE BUREAU OF RECLAMATION’S WATERSMART GRANTS: WATER AND ENERGY EFFICIENCY GRANTS FOR FISCAL YEAR 2017 FOR AZUSA LIGHT & WATER’S ADVANCED METERING INFRASTRUCTURE (AMI) PROJECT. DISCUSSION: In November 2016, the U.S. Department of Interior, Bureau of Reclamation, advertised availability of a Water and Energy Efficiency Grant for FY 2017. Advanced Metering Infrastructure (AMI) projects are eligible for this particular grant, but for no more than $500,000 per year with a cap of $1 million over a three year period. Grant applications are due by January 18, 2017 and require applicants to match the grant award amount. Since the Azusa Utility Board authorized Staff to negotiate an AMI contract with Sensus USA in October 2015, and since parties are nearing completion of contract documents, Staff desires to submit a grant application to the Bureau of Reclamation for $1 million. APPROVED COUNCIL MEETING 1/3/2017 Resolution for AMI Grant Application January 3, 2017 Page 2 While grant application details are still being finalized, the following costs and grant fund offsets are generally anticipated during the first 3 years of the project: Project Year Water Grant Share Electric Total w/o Grant Total w/ Grant Year 1 693,682 346,841 374,173 1,067,855 721,014 Year 2 4,269,400 500,000 2,223,946 6,493,345 5,993,345 Year 3 2,009,717 153,159 1,044,597 3,054,314 2,901,155 TOTAL 6,972,799 1,000,000 3,642,716 10,615,515 9,615,515 3 Year Preliminary Budget for AMI Project Adequate cash is available in reserve funds of both the water and electric utilities to absorb these costs, however, the grant would allow an offset of $1 million over three years, thus reducing the cost to the water fund to about $5.9 million. Grant funding would make the project more desirable; however, based on a consultant cost-benefit study of the project, the project would likely be cash flow positive in year 3 at about $1.2 million/year, assuming full meter replacement in year 2 of project. According to the study, positive cash flow from the project is expected to eventually be about $2 million per year, and so the project can be self-funded through current utility rates, with initial seed funding coming from cash reserves, and the same being replenished through positive cash flow over time. While staff is still finalizing the Sensus AMI contract, it is recommended that the City Council approve the attached resolution to seek grant funding for a portion of the utility modernization project. Staff is working with its grant consultant, Blais & Associates, to prepare the grant application. Staff has provided this consultant with a scope of work for the project from contract documents that are being negotiated currently, but scaled the budget to meet a 3 year grant funding cycle. FISCAL IMPACT: The cost of preparing and submitting the grant will be about $8,800. The potential grant award as noted in this report is up to $1 million. While the Azusa Utility Board has not formally approved the Utility Modernization Project at this time, Staff anticipates a positive decision on the project when the Sensus contract is formally presented for approval. Notwithstanding this belief, the grant application does not obligate the City to execute a grant agreement or to pursue the AMI project. If the grant is awarded, the fiscal impact will be a savings of up to $1 million for the AMI project over three years. Prepared by: Reviewed and Approved: Cary Kalscheuer George Morrow Assistant Director-Customer Care & Solutions Director of Utilities Reviewed and Approved: Reviewed and Approved: Louie F. Lacasella Troy L. Butzlaff, ICMA-CM Management Analyst City Manager Attachment: 1) Grant Resolution No. 2017-C6 RESOLUTION NO. 2017-C6 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA, CALIFORNIA, APPROVING THE APPLICATION FOR GRANT FUNDS FOR THE BUREAU OF RECLAMATION’S WATERSMART GRANTS: WATER AND ENERGY EFFICIENCY GRANS FOR FISCAL YEAR 2017 FOR AZUSA LIGHT & WATER’S ADVANCED METERING INFRASTRUCTURE (AMI) PROJECT. WHEREAS, the City of Azusa has prepared an application to apply for federal funding from the United States Department of the Interior, Bureau of Reclamation (Reclamation) to assist in the funding of the Water and Energy AMI Efficiency Project; and WHEREAS, the funding opportunity provided by Reclamation through their Grant Program entitled “WaterSmart Grants: Water and Energy Efficiency Grants for FY 2017” Funding Opportunity Announcement No. is BOR-DO-17-F012; and WHEREAS, the proposed Advanced Metering Infrastructure (AMI) Project will benefit utility customers in Azusa Light & Water’s service territory by providing the ability to read electric and water meters through a wireless network, provide consumption data and service enhancements to customers, and provide new diagnostic and remote control capabilities to the water and electric utility managers, resulting in improved operations management and long-term water and energy savings; and WHEREAS, the City of Azusa intends to enter into an agreement with Reclamation to carry out the AMI Project if the WaterSmart Grant is awarded to the City of Azusa. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Azusa does hereby finds, determines and declares as follows: SECTION 1. Approves the filing of an application for the AMI Project; SECTION 2. Certifies that City understands they will work with Reclamation to meet established deadlines for entering into a grant or cooperative agreement; SECTION 3. Certifies that Applicant is capable of providing the amount of funding specified in the application; and, SECTION 4. Appoints the City Manager, or designee, as agent to conduct all negotiations, execute and submit all documents including, but not limited to applications, agreements, payment requests and so on, which may be necessary for the completion of the aforementioned project. PASSED, APPROVED and ADOPTED this 3rd day of January, 2017. ___________________________________ Joseph Romero Rocha Mayor ATTEST: ___________________________________ Jeffrey Lawrence Cornejo, Jr. City Clerk STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) ss. CITY OF AZUSA ) I HEREBY CERTIFY that the foregoing Resolution No. 2017-C6 was duly adopted by the City Council of the City of Azusa at a regular meeting thereof, held on the 3rd day of January, 2017, by the following vote of Council: AYES: COUNCILMEMBERS: NOES: COUNCILMEMBERS: ABSENT: COUNCILMEMBERS: ___________________________________ Jeffrey Lawrence Cornejo, Jr., City Clerk APPROVED AS TO FORM: ___________________________________ Best Best & Krieger, LLP City Attorney