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TO: Mayor Richard C. Irvin
FROM: Ian Wade, Capital Projects Manager
DATE: March 12, 2019
SUBJECT:
A resolution authorizing the Director of Purchasing to enter into agreements with Crescent Electric Supply, 517 S River Street, Aurora, IL and SolarMax LED, Inc., 3080 12th St, Riverside, CA 92507 in the amounts of $173,582.00 and $66,850.74, respectively, for the purchase of LED Street Lights.
PURPOSE:
To obtain approval to authorize the Director of Purchasing to enter into agreements with Crescent Electric Supply, 517 S River Street, Aurora, IL and SolarMax LED, Inc., 3080 12th St, Riverside, CA 92507 in the amounts of $173,582.00 and $66,850.74, respectively, for the purchase of LED Street Lights.
BACKGROUND:
As was the case last year, the City recently applied for the latest round of Com Ed Energy Efficiency Program incentives to continue with the conversion of existing HPS streetlights to more energy efficient LED fixtures.
Since pricing for many of the fixtures to be installed this Spring was not provided as part of the annual Electrical Materials and Supplies contract, the City solicited and recently received bids from 5 companies to furnish and deliver the 1530 specific fixtures to be installed. The solicitation (RFB) stated that while General Electric (GE) is the City's preferred brand for consistency with the LED fixtures installed to date, respondents could propose other brand equivalents with comparable performance specifications and recognized levels of quality, subject to review and approval by the City as a condition of acceptance and award. Additionally, any alternative brand fixture must be Design Lights Consortium (DLC) certified to be eligible for Com Ed's incentive program. Three of the five bids received were eliminated from consideration due to lack of DLC certification provided or not being the lowest bidder. The two remaining bids from SolarMax LED, Inc. (Riverside, CA) and Crescent Electric (Aurora, IL) were eligible for consideration based on being the low bidder (SolarMax) and providing the preferred GE brand fixtures and local, proven service (Crescent). Local Preference Ordinance does apply to this Request for Bids, however since the local vendor was greater than 4% higher than the lowest, responsible bidder the Ordinance was not a factor in this award.
Com Ed's incentive is based on the lesser of two calculated amounts (excluding the 20% bonus to be received). The methodology used in the past involves a fixed incentive per Watt reduced (this year's rate of 84 cents per Watt reduced reflects an additional 20% above the previous 70 cents which the City became eligible for through the Engineering Division's attendance at a one day Energy Efficiency Conference in Rosemont last year). This number, which would be $233,834.16 for these 1530 fixtures, would not change based on the brand of fixture selected assuming the technical specifications are identical (which these two brands appear to be). The other possible incentive calculation methodology is reimbursement of 75% of the construction cost (fixture purchase and external labor). In the past, 75% of the construction cost had always exceeded the Wattage reduction based calculation and was thereby not utilized. However, with the significant cost saving proposed by Solar Max, 75% of the construction cost would be the lower of the two numbers. As a result, a portion of the cost saved on purchasing exclusively SolarMax fixtures would actually be negated by a reduction in the incentive received.
After reviewing and vetting both bids and the impact of the prices provided on the Com Ed incentive, the City has elected to award contracts to both companies to maximize cost savings (through both fixture cost and incentive to be received) and GE proven reliability. The 418 higher Wattage fixtures from SolarMax provide the greatest cost savings compared to Crescent's GE equivalent, whereas the remaining 1,112 lower wattage Crescent GE fixtures were closer in price to the SolarMax equivalent and thereby determined to be a better overall value (this includes the 34 ornamental fixtures proposed by SolarMax which were not DLC certified and therefore eliminated from consideration). Awarding the purchase of all 1530 fixtures to Crescent over SolarMax would cost the City an additional $146,000 after incentive. However, the value engineered combination of 418 SolarMax fixtures and 1,112 Crescent (GE) fixtures would only cost the City an additional $5,000 (compared to all SolarMax) after incentive. Engineering staff has determined that "upgrading" almost 3/4 of the fixtures to the preferred GE brand is well worth the additional $5,000 and will be recouped through lower anticipated maintenance cost and the additional 3 years of warranty (10 years for GE vs. 7 years for SolarMax). Further, Engineering Staff also determined that giving SolarMax and the 418 relatively unknown proprietary fixtures they will provide an opportunity is worth the savings of $141,000 in tax payer funds. The proposed award structure was discussed with and agreed upon by both SolarMax LED, Inc. and Crescent Electric Supply.
A summary spreadsheet of the numbers is included as an attachment. This spreadsheet presents detailed information on costs and incentives, which result in a total cost to the City of $26,098.58 for this project. This amount includes $19,500 in external labor (see discussion below for additional details).
DISCUSSION:
The Energy Efficiency incentive from Com Ed will reimburse the City 84 cents per Watt reduced (or 75% of the construction cost, whichever is less) for the LED streetlights to be purchased. The wattage reduction based calculation will result in an incentive payment from Com Ed to the City in the amount of $233,834.16, which should be received in Fall 2019. The 75% construction cost incentive for the proposed split award (plus 20% bonus) would only be $216,389.47, which allows the City to utilize and be 75% reimbursed for up to $19,500 in external, supplemental labor to maximize our incentive of $233,834.16. As shown on the summary spreadsheet, this amount in supplemental labor would increase the total construction cost enough to make the wattage reduction based amount the lesser of the two and thereby be applied and remain static regardless of any additional construction cost.
In addition to the lights located on arterial and major collector routes, which have been the City's priority to date, many of the 880 low wattage fixture located on local side roads were made possible for inclusion as a result of supplemental Ward funds offered by Aldermen of Wards 1, 2, 5, 7, 8, and 9 (accounts and contribution amounts to be determined). These funds will supplement the primary funding source for this project (340-4020-418.65-07, LED Streetlight Conversion), which currently contains funding in the amount of $46,000. Any external labor enlisted in excess of the $19,500 described above, which would not be eligible for additional incentive, will be determined based on schedule-based need and Ward funds received and will be such that no budgets are exceeded. This labor will be provided by Utility Dynamics, Inc. utilizing the existing 2019/2020 Electrical Services contracted previously approved.
To cover the initial funding deficit and in anticipation of the incentive money to be received, a budget amendment in the amount of the incentive ($233,834.16) will be required from accounts to be determined. The amendment amount will be paid back in full to the source account upon receipt of reimbursement from Com Ed
IMPACT STATEMENT:
None
RECOMMENDATIONS:
Please forward this resolution to the Finance Committee for their review and recommendation for approval
cc: Alderman O’Connor, Chairman
Alderman Mesiacos
Alderman Bugg
Alderman Mervine, Alternate
CITY OF AURORA, ILLINOIS
RESOLUTION NO. _________
DATE OF PASSAGE ________________
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A Resolution authorizing the Director of Purchasing to enter into agreements with Crescent Electric Supply, 517 S River Street, Aurora, IL and SolarMax LED, Inc., 3080 12th St, Riverside, CA 92507 in the amounts of $173,582.00 and $66,850.74, respectively, for the purchase of LED Street Lights.
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WHEREAS, the City of Aurora has a population of more than 25,000 persons and is, therefore, a home rule unit under subsection (a) of Section 6 of Article VII of the Illinois Constitution of 1970; and
WHEREAS, subject to said Section, a home rule unit may exercise any power and perform any function pertaining to its government and affairs for the protection of the public health, safety, morals, and welfare; and
WHEREAS, the City of Aurora received 5 bids for LED Street Lights and deemed the prices and overall value contained in two he bids as fair; and:
WHEREAS, funding for the materials, supplies, and LED light fixtures is budgeted in accounts 340-4020-418.65-07 and may be supplemented with accounts to be determined and reimbursed $233,834.16 through a Com Ed incentive.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Aurora, Illinois, as follows: authorize the Director of Purchasing to enter into agreements with Crescent Electric Supply, 517 S River Street, Aurora, IL and SolarMax LED, Inc., 3080 12th St, Riverside, CA 92507 in the amounts of $173,582.00 and $66,850.74, respectively, for the purchase of LED Street Lights.