HomeMy WebLinkAbout1999-12-11 City CouncilCity of Palo Alto
City Manager’s Report
TO:
FROM:
DATE:
SUBJECT:
HONORABLE CITY COUNCIL
CITY MANAGER
DECEMBER 13, 1999
DEPARTMENT: UTILITIES
CMR: 447:99
APPROVAL OF CONTRACT WITH PALO ALTO COMMUNITY
FEDERAL CREDIT UNION IN THE AMOUNT OF $350,000 FOR
PROVIDING HOME EFFICIENCY IMPROVEMENT LOANS AT
CITY SUBSIDIZED INTEREST RATES.
9
RECOMMENDATION
Staff recommends that Council approve and authorize the City Manager to execute a
contract with the Palo Alto Community Federal Credit Union (Credit Union) to provide
home efficiency improvement loans totalling $350,000 during a two-year period at City
subsidized interest rates.
DISCUSSION
Project Description
The Home Efficiency Improvement Loan Program (HEILP) is proposed under the City’s
Public Benefits Program that was approved by the Utilities Advisory Committee (UAC)
and Council in February 1999 (CMR:136:99). Under California law (AB1890),
municipal utilities are required to collect an electric charge and use these funds to
encourage efficiency improvements in the public sector. HEILP is designed to encourage
Palo Alto residents to update the resource efficiency of their homes through the
installation of high efficiency appliances, insulation, and windows. These changes will
result in improved resource efficiency and contribute to a healthy environment, lower
annual utility costs, and a better understanding of how energy efficient technologies can
save money and contribute to home comfort. More information about HEILP is included
in Attachment A.
CMR:447:99 Page 1 of 3
The service to be performed under the contract is to provide loans of up to $10,000 to
qualified City of Palo Alto Utilities’(CPAU) residential customers for the purchase and
replacement of energy efficient fixtures, equipment, and upgrades. CPAU will subsidize
the interest charged by the lending institution so that the interest rate charged to the
participant is reduced to zero percent. The subsidy will be funded from Electric and Gas
Public Benefits budgets.
CPAU will refer eligible residents to the lending institution to apply for loans for
approved improvements and loan amounts. The lending institution will evaluate and
grant loans to residents according to the established loan application and qualification
procedures. The lending institution will set the terms and conditions of the loan.
Selection Process
Staff sent a request for proposals (RFP) to 11 financial lending institutions on September
19, 1999. The proposal period was 30 days. A pre-proposal meeting was held on
October 5, 1999 with no proposers attending. Responses were received from three
qualified lending institutions on October 19, 1999, as listed on the attached proposal
summary (Attachment B). Those firms not responding indicated that they did not submit
a proposal because they did not supply the type of service requested.
A selection advisory committee consisting of staff representatives from Utilities Market-
ing Services and the Budget Division reviewed each firm’s qualifications and submittal
relative to the following criteria: RFP response and interest rate charged; timeliness of
service provided and local presence; experience providing similar service; staff
experience; administration and processing fees.
Interest rates charged on loans from all proposals ranged from 6.25 percent to 15 percent.
Additional administrative and processing fees ranged from $0 to $185.00 per loan
(Attachment B).
Staff recommends that the Credit Union be approved as the lowest bidder. The Credit
Union was selected by the committee because its interest rate for the loan program is the
lowest among the three proposals. Even with the minimal fees the Credit Union requires,
the total cost per loan to the City would be less than the two other proposals. In addition,
the Credit Union is the only responding lending institution with an office servicing
applicants locally.
RESOURCE IMPACT
Funds are available in the Electric and Gas Fund operating budgets in the Public Benefit
Program.
CMR:447:99 Page 2 of 3
POLICY IMPLICATIONS
This recommendation does not represent any change to existing City policies.
ENVIRONMENTAL REVIEW
This is not a project under the California Environmental Quality Act (CEQA).
ATTACHMENTS
Attachment A:
Attachment B:
Program Summary
Proposal Summary
PREPARED BY:Anthony C. Enerio, Utility Account Representative
DEPARTMENT HEAD:
of Utilities
CITY MANAGER APPROVAL:
Assistant City Manager
CMR:447:99 Page 3 of 3
ATTACHMENT A
HOME EFFICIENCY IMPROVEMENT LOAN PROGRAM
Program Description:
The City has established a two year Program, funded to assist qualified City residents and property owner’s
in acquiring loans (with below market interest rates) for the purchase and installation of energy efficient
equipment, and upgrades. Alternatively, if the resident choose not to participate in the loan program, they
can take advantage of corresponding rebates The City, which has establishes Participant qualification
requirements, shall subsidize loans under the Program for the following:
¯Heating, Ventilation and Air Conditioning
¯Insulation
¯Residefifial irrigation/plumbing efficiency
¯Indoor and outdoor lighting
¯Premium appliances including water heaters, dishwashers, clothes washer and dryers,
refrigerators
¯Windows
¯Lighting
¯Home Office Equipment Improvement
¯Other such improvements the City may add to the Program
Program Outline
The City shall qualify and refer to the lending institution potential Participants eligible to apply to Lender
for loans, for approved improvements, and approved amounts, for properties located within City’s
incorporated city limits, and having a valid City of Palo Alto Utilities account number.
The Participant shall apply to the Lender, and qualify for loans from Lender, in accordance with Lender’s
established loan application, and qualification procedures.
The Lender shall evaluate and grant loans to Participants in accordance with Lender’s Procedures. Risk of
loss shall vest solely with Lender. The City shall be responsible only for identifying potential Participants,
establishing Project eligibility, and setting the authorized amount for the improvement(s) contemplated
under the Program, to a subsidized loan maximum of $10,000.00, per Participant.
Subsidy
The City shall subsidize the interest rate charged to Participants by the amount required to reduce the
interest rate charged to the PaiXicipant to zero percent (0.0%). Loans of up to $10,000.00 shall be eligible
for interest charge subsidy under the Program. The cumulative total of all loans to be subsidized under the
Program is $350,000.00
ATTACHMENT B
Proposal Summary
Lending Institution Interest Rate
9.615%Bank of America
Community Development
Banking
10901 Westminster Ave.
Garden Grove, CA 92843
Energy Finance Solutions
211 South Paterson St. 3rd ft.
Madison, WI 53703
Palo Alto Community Federal
Credit Union
616 Ramona St., Suite 3
Palo Alto, CA 94301
15% for loans up to
$3499
12.5% for loans
$3500 to $10,000
$6.25%
Fees
Title Report: $I00.00
Flood Certificate:S27.50
No fees
Opening Deposit $5.00
Title Insurance: $100.00
Recording: $30.00
Reconveyance: $40.00
Loan Fee: $10.00