Study Session Meeting

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[3] Ray Rodriguez: August 1, 2019. Roll call. Please, Ms. Aquino.

[10] SPEAKER_07: Thank you. President Rodriguez.

[12] Ray Rodriguez: Here.

[12] SPEAKER_07: Vice President Thomas. Member Martinez. Member Gutierrez. Here. Member John.

[18] Ray Rodriguez: Here. OK. So we have three of us. So we have a quorum. So we need the approval of the agenda.

[31] SPEAKER_37: I make a motion that we approve the agenda.

[33] Ray Rodriguez: I second the vote. Motion passes. Get the workshop. Before we start the workshop, does anybody want to, is nobody here? No. Okay, so we'll get there. So, oh, no, no, there are people here besides you two. So superintendent's on you?

[63] SPEAKER_21: Okay, thank you, members of the board, ladies and gentlemen. At this time, I'd like to hand it over to Susan Condon, who will introduce our guest, and we'll launch into our study session.

[72] Ray Rodriguez: Oh, before we do that, we have this good-looking young man here that's new to us.

[77] SPEAKER_21: My apologies. Let me introduce to the community and to the board and members of the audience. Barry Schimmel, sitting to my right here, has agreed to help us as interim CBO. He has a great deal of experience. I'm not going to read his fantastic bio. right now, but he's got a few days he can use. He's a limited amount of days where, according to STRS and PERS, but we've got him to agree to work with us and he's been already helping look at some issues that I've brought to his attention and connecting the dots specifically on next steps with ADIS and starting to explore Whiteford and some of the things that were kind of on the back burner. I know that he's already met with Susan and her team We're glad to have you and welcome. I don't know if you want to say anything before we start.

[127] SPEAKER_20: It's a pleasure to be here and it's my third day and staff has been just so courteous and gracious. I was here an hour, I had all my technology going and I've had the opportunity to work with food services already and maintenance and operations and some direction from our superintendent. I've begun to look at some things. Tonight's presentation is something the board has looked at. I'm very familiar with SPUR, and Kevin and I are the gentlemen that will be presenting. We'll talk about SPUR, and I'm positive about SPUR, and then Forefront. I checked that out with two or three people that I know, and so we're going to be asking the board at the end of the presentation, do you want to move forward to look at a contract? And that hasn't been developed, and that would be my responsibility to help do that. But if the board isn't interested, then we don't want to spend district money. So that's really the question before you tonight. Thank you.

[187] Ray Rodriguez: And if you want to know anything about Newark or you need a personal tour, Ms. Condon's been here forever, so I'm sure she'll oblige.

[194] SPEAKER_37: I took them through half yesterday. Thank you. A pleasure meeting you. It's a pleasure. Thank you. OK, Susan.

[201] SPEAKER_36: Thank you. OK. As Barry mentioned, we have gone through this similar to this presentation with Forefront about two years ago. So they're a little bit familiar with Newark Unified and hopefully some of you remember, you may remember, right? Brian Taylor from Forefront is here, and we have Kevin Flanagan from SPUR to explain to us what the program is and what offers we have for Newark. And they've actually, in their presentation, broken it down for a savings per school site. So when you look at the presentation, you'll see everything for Newark. So I hope you are open-minded, listen, figure out what we're going to do, and then see if we could move forward on getting a contract set up to get some solar in this district. So with that, Kevin's going to start, right? So we're going to have Kevin Flanagan start with SPUR. SPUR presentation. Thank you.

[264] SPEAKER_10: Sorry.

[266] Ray Rodriguez: We're very open-minded, especially if it's free.

[270] SPEAKER_18: Yeah, good. Good, good, good. Perfect. Same with me. All right. So as Susan mentioned, my name is Kevin Flanagan. I'm with SPUR. Thank you for having me here tonight. I appreciate you taking the time. As we get the presentation pulled up, I'll jump in. So I, tonight we're going to talk about the Renewable Energy Aggregated Procurement Program, or REAP Program. If you can go to the next slide. Is there a clicker? Maybe then I don't have to, or I can use, there we go.

[299] SPEAKER_21: And also, well, just a point of how we do it. Make sure you're using the mic as much as possible. We do have, we are streaming live, and you are live. at home for some folks.

[309] SPEAKER_18: Perfect. Thank you for the reminder. So SPUR stands for School Project for Utility Rate Reduction. We are a joint powers authority made up of school districts. So we were founded in 1989. by K-12 districts, by community college districts to create piggybackable aggregated buying programs to help school districts reduce utility costs. So we have hundreds of members now in our, essentially we're a buying consortium. We have hundreds of members in our JPA currently. We're governed by a board of public agency administrators, so these are CBOs, directors of facilities who work at various K-12 districts around the state. And all of our programs are self-funded through a transparent administrative fee. So if you decide to participate in any of our programs, it's funded through that administrative fee. We have a solar and storage buying program, which is the program that I manage. We also have a natural gas program, which you guys participate in. We have an electricity buying program. We have a telecom buying program. And we have an LED lighting program as well. So we have all these various kind of buying programs to help reduce costs for school districts. That's okay. I don't mind. These are, this is our current board. These are my bosses. Like I said, these are all folks who work at school districts around the state as CBOs and directors of facilities. So diving into what the REAP program is, the REAP program is an aggregated solar buying program. We're leveraging our really big buying power in the marketplace and our expertise to essentially do four things for school districts. Number one, we want to streamline the solar buying process. That saves you guys time. So rather than going through the process of running your own RFP, you can essentially piggyback off of the RFP that we ran, which saves you a lot of time and a lot of resources. Secondly, using our buying power, we want to drive down project pricing, which is obviously good. That's the goal of these projects, is to save you guys money. Number three, using our expertise, we're negotiating really great contract terms and conditions to help reduce overall project risk, which is obviously important. These are long-term projects. And lastly, really, we want to increase transparency. So all of our program documents, the RFP that we put together, the master contract, everything that's a part of this program is publicly available. And so even those school districts that don't use our program, I think, benefit from us creating this program because we're educating the marketplace and making more informed buyers out of school districts. So what we did is we ran a competitive statewide RFP. We secured pre-negotiated piggybackable pricing in terms for SPUR members and eligible non-members that you guys can essentially take advantage of if you want to. In terms of what we did in the RFP, we solicited pricing and terms for very specific sites with very specific includes, excludes, and assumptions. The goal of the RFP is to get apples to apples bids back from the vendors. We were really excited early on in the RFP because we were approached by Fresno Unified School District, the fourth largest school district in the state. They said they wanted to be our cooperating agency in the RFP, so that was great for us because it kind of juiced up our buying power and made the RFP that much stronger. The RFP itself, the scope of work, was for solar PV, so carport canopies, roof mount projects, ground mount projects, small projects, big projects, medium projects, you name it, like a giant matrix of different project types. Energy storage, which is becoming more and more popular to help reduce demand charges and EV charging stations as well. So all of those things are available to the district under our master contract for you guys to take advantage of. We receive proposals from all the major vendors that do solar projects for school districts. And then ultimately using best value criteria, we selected Forefront Power as the winner of the RFP. We entered into a master contract with Forefront Power. That master contract is essentially the document that you guys piggyback off of. And that's the document that memorializes the pricing terms, conditions, pre-negotiated contract documents, et cetera.

[556] SPEAKER_21: So just a point that I want to make to the board. When we had bookmarked this last time we left it, the board had asked staff to start putting together an RFP to go out to this bidding so we could finally just move forward on solar. What I understand your program does is allows us to piggyback on what you've already done that for us is one of the advantages of the program that you're presenting to us tonight, is that correct? Absolutely. I think it's just important because I want to make sure the board hears that we were following the direction they gave us but we stumbled upon this opportunity, that's why we're bringing it to you tonight to consider. Thank you.

[588] SPEAKER_18: Great, yeah, thank you. So in terms of like what we were able to accomplish in things that are included in the master contract, things that are included and available to the district, really great pricing for all sorts of different project types. The PPA rates that are being proposed here are 0% escalations. They don't go up over time. It's flat for the term of the project. There's a performance guarantee in the contract as well. So forefront power, the vendor that you would ultimately enter into a contract if you decided to, They have a performance guarantee annually that they have to perform to. Otherwise, they pay a penalty to the district to make up for that underperformance. There are liquidated damages. And so if the project delays during construction, they have to start paying you for those delays. The renewable energy certificates. So these are renewable, these are virtual certificates that accrue to the district that basically confirm that you guys are green, right? We see a lot of school districts sign contracts where they're giving these recs away to the vendor. And you really want to make sure that you hold on to these so that you can meet any future state mandates to be green. All the pricing assumes prevailing wage. Operations and maintenance of the system is included, so you guys don't have to worry about it. There's an option to purchase the system. So you guys, if you fall, you know, into a lot of money, let's say Susan finds a suitcase of money on the street and she wants to buy the system, you can purchase the system out at any time after year six and own the system. There's LED lighting under the carport canopies. for at nighttime. There's online system monitoring so you can see what the systems are performing. The public can see what the systems are performing and so there's accountability built in in terms of performance. And then finally there's pre-negotiated contract documents. So these are the contracts that you would use to enter into an agreement with Forefront Power. These are not take it or leave it. Contracts, your attorney will have feedback, I'm sure. You'll have feedback, I'm sure. Staff will have feedback, I'm sure. But we feel like we got the ball pretty far down the field in terms of negotiating a really good contract on your behalf. Sorry? Oh, thank you. So this is my last slide. So, like, in short, the benefits of the REIT program are you could take advantage of our buying power. Thank you very much. You get reduced project risk because we've negotiated really good terms and conditions on your behalf, and there's really good contract documents for you to take advantage of. The REAP program's been used by school districts across the state, so you're not the guinea pig. You're not taking a chance on a new program by piggybacking off of our RFP. It's really just kind of an easy button for you guys. If you want to do solar, this is a great way for you to accelerate the adoption of renewables and execute these projects in a fast and efficient manner. This is just a slide that I like to include, especially for public presentations. These are hyperlinks to all of our documents. Again, it's really important to us to have transparency in our program. And so I expect that you'll all click on these later and read every single word of every single document. But there you go, anyways. So that's it for me. I don't know if you want to ask questions now of me or if you want to wait for Brian to finish his presentation and do questions then. It's totally up to you guys, whatever you'd like to do.

[778] SPEAKER_20: If I might add, SPUR is the overall And they, because they have a lot of experience with energy, consolidated, went to a bunch of vendors rather than have the board entertain and your staff entertain 15 different proposals and they wanted to compare apples and apples. So they're not involved with the providing of the equipment or any of that, but they're sort of the first filter. We will, and I've done solar in at least six different districts, be the second level of filter to look at it before we actually bring that contract to the board. I've done some preliminary research and have found nothing wrong with Forefront, but we've got to delve into the details of it.

[833] SPEAKER_18: All right. Thank you.

[839] SPEAKER_19: So in my experience, when you have two different percenters and at the end we'll have a

[877] Ray Rodriguez: Not to put you on the spot, but.

[879] SPEAKER_19: So my name is Brian Taylor. I'm with Forefront Power. And as Kevin mentioned, we won their solar and storage RFP. So that's why I'm here. So really what you have here with Spurs RFP is a way to really leapfrog your neighbor districts and to go sustainable, or to be a sustainability leader for California in one fell swoop. So through a combination of on-site solar, battery storage. We offer guaranteed performance of the systems. You can include EV charging stations. You get energy savings, a significant amount of savings for the district. You get to piggyback off of a statewide RFP. We incorporate solar and storage into the curriculum for the district. And you get ahead of any potential zero net energy or renewable standards that are coming down the pike from on high, be it the state or another entity. So forefront power, the quick Quick commercial, you know, we're a best-in-class development group. We've done over a gigawatt of solar throughout the country. We've done over 80 megawatts of solar, of DSA solar over 200 different individual school sites. So a lot of solar with schools. And we're widely considered the leaders in renewable project financing. So our ability to finance these systems really effectively allows us to offer you a better rate. We're backed by Mitsui, which is an A-rated Japanese conglomerate, a very stable balance sheet. behind us, which is important because, again, there's no upfront capital cost on the part of the district. So someone has to be cutting checks for modules and steel and all that stuff along the way. And so Forefront Power, with Mitsui behind us, has a checkbook that's in good standing, unlike a lot of other solar vendors. So let's spend a little bit of time on this slide to understand really what the vehicle is. It's called the Power Purchase Agreement. Under the Power Purchase Agreement, Forefront Power will finance the systems. We will design them. We will build them. And then we'll own them and operate them. These are on your parking lots, essentially. So no upfront cost. Save your bond funds for other things. We finance the system. You buy the energy produced by it at a flat rate for 20 years. As far as right now, you have an old PPA, an old utility rate. After you go solar, you're buying a lot less energy from the utility. So you have a lower utility bill. you have your power purchase agreement payment, and then you have those two are less than your previous bill. So as PG&E rates have tended to go up over time and are projected to continue to go up given that they're in Chapter 11 bankruptcy, they're facing a lot of requirements to upgrade the grid throughout the state, those payments are going to have to be financed by rate payers. So our rate is flat for the solar energy. So whereas PG&E rates go up over time, even at a fair inflationary rate, the district is essentially getting off that treadmill There's also a 30% federal tax credit. So the district, as a public agency, if you were to buy and own these systems yourself, you would leave that 30% federal tax credit on the table because you couldn't monetize it because you don't pay income taxes. So Forefront Power, as the owner of the systems with these on our balance sheet, we monetize that federal tax credit and pass that benefit along to you in the form of a lower cost for energy. And that tax credit is starting to step down at the end of this year. Lastly, it's an aligned partnership. We finance these systems, we spend millions of dollars to build them, and the only way we make any money is by the system producing energy and you buying the energy produced by it. So you want to see it produce clean energy, we want to see it produce energy, so we get paid essentially. That's the model. And because they're our systems, because the only way we make money is by them producing energy, we take care of all the operations and maintenance. This is not another asset for your staff to have to maintain. And we guarantee the performance. So if it doesn't produce in any given year the kilowatt hours that we say it will, we make you whole for what you had to pay PG&E for that more expensive energy. That's the basic framework. So we're looking at, for Newark specifically now, we're looking at solar at all your sites. So I believe there's 11 total installations. Many of them cover more than one school. So here, we would install solar at the school next door, but it would power both meters, both the meter here and there, through an arrangement called net energy meter aggregation that PG&E allows you to do. So one point of common coupling, but we're offsetting both. And that goes for a number of different, at Birch Grove Intermediate with the MOT yard next door, et cetera. We're looking at, in year one, reducing your energy expenses by about $248,000, which is 22% of your current energy bill, which is basically cutting your bill by a fifth without having to spend any money. And over the course of eight years, assuming that PG&E rates go up at a conservative rate that SPUR likes us to use to show that we're being conservative, about $8 million over the course of 20 years. We use DSA pre-check design, so we're in and out of DSA in a day. And we could begin construction as early as the first quarter next year. So looking at the portfolio of sites here, you're looking at 11 sites. Your biggest, of course, being the high school followed by the junior high school. You have a flat PPA rate for 20 years. You're going to produce about 73% of your energy consumed via solar. And so at many of these sites, we're not space constrained. We're hitting the ideal amount. We're able to create all the energy you're going to really need. Again, our goal is to get your bill to zero, not your energy consumption to zero. And we want to leave some headroom in case you have energy efficiency measures in the future. So we don't want to overproduce and make a system bigger than you need. And as you can see right now, you're spending about $1.1 million on energy at these sites. And then we would save you about, $250,000 in year one. And then one thing I wanted to point out was in this slide here, when we were working with staff previously at the end of 2017, we were able to submit interconnection applications for these sites at no cost to the district and no obligation to the district to essentially get you grandfathered on some stuff. That stuff is, as you can see here right now, time of use periods. periods when you're getting charged the most amount for energy is peak period. And that is right now between 12 and 6. But PG&E is moving that period to 4 to 9. So that means that solar energy is really valuable right now because we're offsetting that peak energy. But as these rates change, then we're going to be offsetting more off-peak and mid-peak energy. And that's the value of that solar energy is going to go down. By us submitting interconnection applications before the end of 2017, we got you grandfathered on this more lucrative deal, essentially. That's the highlight. Why don't we buy it? Maybe we want to own it. What does that look like? So, here you see the different kind of procurement methods. So, if you were to, we showed you what the PPA would produce, about $8 million in savings over the course of 20 years. No operations and maintenance. no capital outlay. If you were to purchase the systems yourself with bond money, you would require about $8 million, $7.8 million investment across the district. And you would be looking at a roughly 14-year payback with about $6 million in total savings. So Portforn Power is really quite agnostic when it comes to whichever method you choose. But the PPA has superior savings. And it's not just about savings, but about a different risk profile. You're not responsible for these systems. making sure that they're operating, et cetera. And then the third scenario here is essentially you have options. When you enter into a PPA, you have the option to purchase it out in year six after we've monetized all that tax value. So you can purchase a system any year after year six. And the savings is quite compelling there as well. Storage is also included, so at one of your sites, at Newark High School, you're on a rate tariff that you're getting charged a lot for your demand charges. What is a demand charge? It's essentially these moments during the month, this one 15-minute interval when you have your maximum draw from the utility. And the utilities have to stand ready to make sure everyone has all the power they need at all times, so they charge you for that one 15-minute interval. And what the battery does is we pair battery with the solar at this site. And the battery has an intelligent algorithm in it that it senses when you're about to have that spike and it discharges energy. So now the utility just sees a much flatter load profile. And they charge you less for it. And it works just like a PPA. We finance the battery. We own it. You pay a service payment for the battery. And the battery does what it does and lowers your demand bill. So that's the background, that's the basic framework for the portfolio here at Newark. As Kevin mentioned, SPUR is a joint powers authority. They ran the RFP for solar and storage throughout the state. We won, and that's why I'm here today. And it's been used by over 20 different public agencies throughout the state. And it's a real way to get all the value of an RFP without having to run your own, because they ran a very competitive statewide RFP. And then I mentioned earlier that the tax credits are starting to step down at the end of this year. And so if Forefront Power, if we have a contract executed, Forefront Power can procure the necessary pieces of equipment to safe harbor that tax credit. And so we can build next year, but we get the full tax credits by taking some action this year and proving to the IRS that we did some stuff enough to capture the full 30%, if that makes sense. Some bells and whistles. We offer EV charging stations. Those can be included at no cost. They have revenue collection capabilities, so you can make people pay to use them. We offer solar workstations. So these are completely off the grid. They allow students to have tangible solar experiences. They're great if you put them in a quad. We offer sustainability promotion. So we want to get out there, if you do something like this, and scream it from the mountaintops that you're being sustainable, have a lot of good press coverage, et cetera. And then there's also a solar curriculum, so having an ability for students to see the system outside, see on the monitor what it's producing, and then have that incorporated into their lesson plan.

[1561] SPEAKER_21: Several of our people in our community have electronic vehicles and there's not a lot of places to charge them in town. And I think that's definitely a place for revenue enhancement for us.

[1585] SPEAKER_19: So that's really it. I mean, you have a real opportunity here to get in before these tax credits step down at the end of this year. You can save over the course of 20 years, and you can piggyback off a pretty comprehensive statewide competitive RFP. So that's it. I'll be happy to field questions either to Kevin or myself.

[1613] Ray Rodriguez: Thank you so much for both of you for your presentation. Since I was here when we had the last presentation, if it's OK with the board, I'll go first. And we were very excited with the last presentation. We wanted to really move on it. But, you know, as happens a lot of times, you know, you get so busy doing other things. And we wanted to go out for the RFP and all that stuff. So I'm glad that you're able to do that for us. But one of the questions that I had was, you mentioned best value criteria, because normally when you get an RFP, you're looking for the, you know, the most reasonable, the lowest critical, I mean, bid, but, and you use best value. So can you just share with me what that means?

[1665] SPEAKER_18: Absolutely, yeah. We're not required to use lowest bidder. I'm familiar with that approach. We prefer a best value criteria because it allows us to also look at things like experience, financial stability, the makeup of their team, et cetera, et cetera. In our scoring criteria, and I can send it to you if you want. It was a weighted scoring criteria. Pricing was the most important component of that scoring criteria, and Forefront had the best pricing. So they won on that level, but we looked at other factors as well. Because it's, these are complex projects. They're going to take up your parking lots. They're very visible, right, to the public. And so we felt like we wanted to be able to look at other aspects of the vendors.

[1712] Ray Rodriguez: I appreciate that. Member Gutierrez.

[1715] SPEAKER_37: I had a couple questions.

[1717] Ray Rodriguez: Oh, before you start. We'll do two questions each, and then we'll rotate if that's okay.

[1721] SPEAKER_37: Okay. Sounds good. Well, my first question is going to be to Mr. Schimel. You did speak pretty positive about it. But in your position as our current CBO, what is your recommendation based on what you hear?

[1744] SPEAKER_20: Spur has done the first level, as I mentioned, of screening. And compared to the six companies that they looked at, they were the best. They're not the only ones. There's a couple other big ones that aren't even on the list. So what we would do if the board wants us to go forward is to look at the proposal in a little more detail. The advantage, and it's a really good question, if you were to just do this on your own and fund it, you'd make more money. There's no question about that. The advantage they're providing is we don't have $5 million in a piggy bank. That's one. We don't have the staff to implement managing, repairing, and doing that. So they're going to make a very large commitment, because the panels are expendable. And they're supposed to last 20 years, and I'm sure they will. But it's like your car. Do you want to be driving that 20 years from now? Because five years ago, we didn't have backup cameras. Same concept, but what we're going to do for this district is invest in the ground. To put up the panels that are in the air for parking coverage is very expensive because you have to drill down. It has to meet DSA. We're going to want to own those 20 years from now because newer might be a different panel. It's like your iPhone or your cell phone. But the base, we'd want to own. So that's one of the advantages of, in a sense, leasing. And you saw the slide they brought up with the three different options. So they're really an investment partner. And I want to be quite up front with the board. An investment partner wants a return on their money. So if we had the $5 million to do this, and I'm just making that number up, we don't need that. And we had a energy department that could run that, clean them, make sure the meters are running properly. don't need them. We don't have that, and there would be a startup cost. So we're sharing our savings. The other thing I would recommend to this board is I have many others. Everybody talks about energy savings. That's theory. And as he showed, we might be able to save 22%. I am impressed with they only used 2.7%. A lot of presentations use 5% and 6%, and that has not been the case. So it's a cost of living. It's a fair number. At the end of this program, internally, we're going to need, if we're spending $100 for energy, and now we're only going to be spending $75, as a board, we need to work with our business department and set up a new account that The energy money goes down to 75, and the 25 goes to a designated account. Because you can walk into most districts and say, okay, you've been doing this, and I hear energy people say, we save a million and a half dollars. And my first question, what account is it in? I'd like to spend it. Well, we don't quite do it that way. That has nothing to do with the solar, so that will be one of the things while I'm here, I've already talked to Kim Lola about we need to have that to prove back to you quarter eight what we're doing. Does that answer the?

[1963] SPEAKER_37: Most definitely. Thank you. Thank you. Is that part of my two?

[1967] Ray Rodriguez: No, no, go ahead. Go ahead.

[1968] SPEAKER_37: Okay. Okay, so you guys answered the maintenance part, so you guys would take care of full maintenance during the time that we're leasing it. If after six years or X amount of time we decide to own it, that maintenance then becomes our responsibility?

[1985] SPEAKER_19: Yes, but you can enter into an operations and maintenance agreement with a third party like us to maintain the system.

[1991] SPEAKER_37: OK. And question, well, it might be for you guys or them. Because closing a school is in the air, if we do go with them and we end up closing a school, what is a likelihood that could happen to the panels that are then installed in a closed school?

[2025] SPEAKER_20: If you were to close a school, that solar stays there. And the advantage is, and this is a discussion for another time, is what the purpose is, if we were to lease that as a revenue source or exchange it for something, that adds value to the property because it has solar. Let's say that we were to lease it to a business, paying normal market rates. Well, they have to energize that building. And if they could use that solar, that would work. Now, we're going to have to talk to legal about, can we do that? But there's options. We may then own just a piece of that, just that one, because we're not using it as a school. So we would go ahead and do that. As I mentioned earlier, The key is, once it's there, whatever's on the top, those panels can change out. And they're going to get better. They have to. It's technology. So I don't see that as a difficulty. I see it as an added value. The savings, because they're upfronting the capital improvement, wouldn't be that much by not doing it. Okay. And the value would come back to you when you did something else with that property. If you were going to rent the property and they had to pay their own PG&E versus you rent the property and you have a discount on your energy, then the district's rent goes up.

[2116] SPEAKER_37: Okay.

[2117] SPEAKER_20: Thank you.

[2118] Ray Rodriguez: Member John.

[2120] Bowen Zhang: Hey, so I have a question for Mr. Taylor. So, first year we have this 22% number there. My question is There is no difference in the cost structure and the saving structure on year one and beyond, right? What I'm saying is year one, there will be no additional cost and come to year two, year three, the structure, the saving structure, they're the same, right? They're just accumulated year after year, right? For the PPA.

[2147] SPEAKER_19: That's right. The PPA basically is the power purchase agreement. You agree to purchase the power at a fixed rate for energy. for 20 years. So that thing is going to produce basically the same amount every year. It degrades by half percent every year. But you agree to purchase the kilowatt hours generated by the system, and then those kilowatt hours offset your energy bill from PG&E in a certain way. In the summertime, the system's going to be producing a lot of energy, but the school isn't going to be in session, so a lot of that energy is going to be going back to the grid. And so the grid is then compensating you at the full retail rate for that energy. So rather than buying peak summer power, you're selling peak summer power. So you're getting your maximum arbitrage in that way. And that's on an annual basis. That's net energy metering. Your meter's spinning backwards, and you're getting credited for it. And so that's based on PG&E's rate structure, the amount that you're getting credited for. And then what you owe us every year is predetermined based on what the system produces. And if the system doesn't make energy because it's down, then you're not obligated to buy anything because it didn't produce energy.

[2217] Bowen Zhang: And second question is, I see the three options, PPA and outright purchase and rent to own. So in the first 20 years, it looks like PPA saved us the most money. What about the approximate projection beyond the 20 years?

[2233] SPEAKER_19: That's a great question. So really, what happens to PPA after you're 20, right? So three things can happen. You can say we don't want it anymore, and then we come in and remove it. And that's in the agreement. It's in the contract that we're obligated to remove the system. Two, you can say we want to buy it. And that's what the rent-to-own scenario is. In year six, we want to buy it. In year seven, in year 20, we want to buy it now. And you can buy it. And then the third scenario is, hey, we like the way things are going. Let's just extend for another five or 10 years. And so if you have a lot of leverage at that point 20 years from now, You know, the scenario could go something like this, forefront power, come in and remove these systems, have this multimillion dollar construction project and get these out of here. We don't want them anymore. And then I'll come to you and say, well, you know, how about we just give you a rate that makes you happy because we don't have this multimillion dollar construction projects. Now you get a lot of value. And then you could also just remove the panels and put new panels on these steel structures, which are going to last. As you mentioned, you have all the conduit, the cabling, all the system set up, you have You're a quarter, three quarters of the way there if you want to swap out new panels that are made of space age material from 2037. So you have a lot of opportunity.

[2309] SPEAKER_18: I could just add because I can't help it and I'm just kind of an energy dork. So the other reason why the 20 year period is important is that the Public Utilities Commission only guarantees you and anyone else who has solar 20 years of grandfathering on net metering. The mistake that I think a lot of people are making is they're entering into like 30-year agreements. Thank you, Brian. So right now, Brian was talking about the systems in the summer. They'll be producing energy, and they'll be sending them to the utility. And the utility is required by law to give you a bill credit for that energy. And they're required to do that for the next 20 years. And that's as long as the Public Utilities Commission will guarantee that setup, right? If you enter a new agreement longer than 20 years, you're kind of putting yourself at risk, because in year 21, you might be sending energy back to the grid, but we don't know what the rules are going to look like at that point in time. So we strongly recommend not going past 20 years right now. You'll have the option in year 19 or 20 to buy the system, and that might be a really good deal, and maybe the rules at that time are really favorable, and you'll decide to extend. But committing to that period beyond 20 right now, in our opinion, we advise you not to do that.

[2380] Bowen Zhang: So the option to buy in year 19 or 20, is that the PPA or the rent-to-own one?

[2386] SPEAKER_19: The rent-to-own is the PPA. Okay, I see. It's just, you know, there's a decision tree every year after year 6. Do you want to just continue to do the PPA?

[2395] Bowen Zhang: So rent-to-own means option to buy any year from year 1 to year 20, right?

[2399] SPEAKER_19: Year 6 to year 20. You can't buy in the first six years because that's when we have to own it in the eyes of the IRS to get the tax credit.

[2409] Ray Rodriguez: A couple. What I was trying to say before, it was the lowest responsible bid. And then I'm thinking of JTPA, when the county gets together and we get lower rates for medical and all that stuff. So it's nice when you can use a vendor that's already done a lot of the work. So I had a question for you. separate at forefront from the others so that you would pick them?

[2443] SPEAKER_18: That's a great question. And I could send you guys the full score sheets if you like, but essentially pricing, contract terms and conditions, experience team, and really the thing that a lot of people don't look at as much as I think they should is financial stability. So you can get on Google and Google other solar companies and they're It's a topsy-turvy world, as Brian said earlier. This is a long-term agreement that you're entering into. And obviously, anything's possible over 20 years. But it's best to enter into an agreement of that length with a company that's as financially stable as possible. They are backed by Mitsui. Brian mentioned this earlier. Massive Japanese conglomerate, big balance sheet. which also helps you during construction. And so one of the problems we see a lot of times in the industry is a solar company will sign a PPA with the school district but not actually have the funds yet to kind of put toward that project and build it, right? And so there's delays and delays and delays. Mitsui, as Brian said, has the deep pockets to spend money on these projects as soon as the contract is executed. They're ready to go, so.

[2519] Ray Rodriguez: There's a presenter over the years, I've asked that the subject comes up about local workers, as opposed to having somebody come in from outside. And then the other one is unions, because we have two very, partnership with two very strong unions. So are your workers going to be union? And are you going to try as much as you can to, when it's available, to hire local workers?

[2548] SPEAKER_19: the importance of using local labor. And so what we will do is we will use local subs as much as possible. And normally what happens is we hire our construction, our EPC, our engineering procurement and construction firm that's going to build these things. And they have a few skilled tradesmen, the guys that really have to run the show. But the majority of the manpower comes from local union halls. And so in addition to pulling from local union halls for the actual manpower. We'll be using Geotech, Title, Survey, all local companies. So there's going to be a majority of the labor will come locally.

[2585] Ray Rodriguez: Okay. And I just have one more. Go ahead. Breaking the rules, Mr. President. Sorry. When we had the percentage before, they were only going to do so many schools. There were some of them that they weren't going to do because of equipment or whatever. You're aggressive and you want to do all the sites. That's the way I get it. So did you get a chance to inspect all our sites to make sure that, you know, what we need to do to, you know, make sure that they're ready to go?

[2615] SPEAKER_19: Yeah. So I personally visited each and every site. We checked out the meters and the services at the sites to make sure that they could electrically handle what we're planning on putting there. We looked at the parking lots. We counted the number of ADA spaces, the number of trees and light posts and all that stuff, and that factors into our bid. We got a hold of your electricity consumption information in 15-minute intervals. And so that has informed our savings analysis. We took your feedback from the last board meeting. The gist of one of the things was, why aren't all the sites included? If we want to do solar, can we do it district-wide? Can we make sure both sides of town have solar? And so we've leaned in and are trying to make it work for all sites. If there's an issue with any of the sites, we're happy to discuss it and chop it out. But yeah, go ahead.

[2666] SPEAKER_37: Brian, since you're up there already, you mentioned something towards the end of your presentation, battery service payment. Can you just explain a little bit more about it? Because I'm not sure if it's something that's already included or you mentioned it as a separate option.

[2681] SPEAKER_19: Yeah. It is included in that number that you're seeing. It is a separate option. You don't have to do it. But it is a good option.

[2690] SPEAKER_37: And what is it then?

[2691] SPEAKER_19: So batteries are

[2694] SPEAKER_37: Oh, I understand. Servicing the battery. Is that what?

[2697] SPEAKER_19: That's right.

[2698] SPEAKER_37: Okay. Got it. Okay. Go ahead. Keep going.

[2702] SPEAKER_19: So if you recall, you have those demand spikes. And so that's what the utilities charge you for. The batteries are dumb, just like solar. They're dumb. You know, the sun shines, the solar produces energy. The battery, they charge and they discharge. The intelligence is in the algorithm that powers the battery. And for that, we use a company based in Millbrae. It's our sister company, also owned by Mitsui. They have a very advanced algorithm that has a lot of real-world data to inform how it's going to discharge the energy. And so the utilities measure that 15-minute spike, that spike in a 15-minute period, whereas the battery algorithm starts measuring your consumption in one-minute profiles. And so it's like bringing a gun to a knife fight. Like, it figures out what your average should be over that 15-minute, discharges the energy effectively to shave that demand spike. Your bill gets lower. I'm not sure if I'm answering your question, but that's the general gist. It's a complicated, it's a little bit more complicated than solar.

[2758] SPEAKER_37: I guess for what we need is, what would be the cost of that?

[2762] SPEAKER_19: Yeah, so the cost of the battery is on the presentation and it would be roughly $18,000 a year in the service payment. $18,000 a year, okay. provide a little bit more detail on the size of the battery. It's a 250 kW battery system.

[2782] SPEAKER_37: So just to, so I can better understand, you guys are providing us a service free of cost, right?

[2790] SPEAKER_19: No, you pay us.

[2791] SPEAKER_37: No, no, no, no, no, no. The solar, the solar. So I'm going, so step one, you guys are providing solar free of cost. No upfront cost. No upfront cost. What other costs were there?

[2800] SPEAKER_19: That's a good question. So, um, And the battery is on the same schema. So there's no upfront costs. You just pay for the battery performance over time. But on the whole, one of the things that you want to look at is inspector of record fees. Now, under the law, you have to legally pay your inspector of record and your special testing fees. So we've excluded those payments. But at some schools, that is a sum. We can incorporate that and reimburse the district. And that's going to tick up the PPA rate a little bit, because now we're increasing our scope. no out-of-pocket, and us to absorb that inspector of record fee, we can do that. But other than that, there's no out-of-pocket costs.

[2842] SPEAKER_37: OK. Are the batteries, and excuse my lack of knowledge here, are the batteries needed?

[2849] SPEAKER_19: Are the batteries needed? Yeah. At this one site, you are enhancing your savings by having the battery.

[2855] SPEAKER_37: So therefore, we need the battery, which will incur an $18,000 a year cost. Right. But it'll save you $12,000 a year. So 12 from 18 or?

[2870] SPEAKER_19: So like the battery will take down your energy bill by about 12 plus 18 is 30. So it'll reduce what you pay PG&E by 30. You pay us 18, you save 12.

[2881] SPEAKER_37: Got it. OK. And then inspector of record fees, do you have an idea roughly of what those look like?

[2886] SPEAKER_19: $20,000 to $30,000 a site. Per site.

[2901] SPEAKER_37: One question for you guys and then I have for the staff is, when you guys gather so much energy, you save, so do third parties, do you guys sell that to third parties, that extra energy you guys save?

[2914] SPEAKER_19: Yep, we do not. We enter into a net energy metering agreement with you, so you're buying the energy and we're only selling the energy to you. The thing is actually only hooked up into your school. We can't sell it to anybody else. You get that energy, and you either power your refrigerator with it, or you pass it through to PG&E, and then PG&E pays you for that energy that you exported to the grid. Perfect. So your bill goes down.

[2938] SPEAKER_37: OK. So then, Mr. Shimwa, I guess this question would be more for you. Being that we have these fees, the battery service fee, they're looking at about $18 a year. And then inspector of record looking at 20 to 30 a year. If we were to go with this program, do you recommend they incur the fee in the meantime, which means we'll be receiving less energy? Or do you recommend we pay those?

[2973] SPEAKER_20: The answer to that question is in the contract. And that is looking at how we're going to do that. Usually, the district pays for the inspector of record. And one of the advantages is they have to do this quickly, because inspector of records get paid by month. And they're not inexpensive. So we'd have to calculate out in detail what the inspector of record is going to cost. Are we going to be able to do it with one, or do we need three? Because the faster you go, if you can do multiple sites, you're going to need multiple IORs. And $10,000 a month is not out of the norm. The battery cost probably can be put into it. And I would say, and this is new news to our vendors, I've done enough of these to know that they write words. It's a percentage of this times the percentage of that times this to this and over here. And then you get to a number. And they calculate it out. And we didn't interpret it that way. So there will be an example for every calculation with if the energy uses this, we multiply it by this, that equals this, divided by that, times a proration of that. Because eventually, if it has to be decided by a court of law, the judge is not going to understand this. And so they need to know how the formula works, because it all sounds good on paper. But I want to see an actual math calculation, two divided by times of that, so that the board can understand that.

[3077] SPEAKER_37: Perfect. And then just one final, superintendent, maybe if you can give us a little bit of history for myself as to my understanding, this is the second time presenting, why you got tabled or why it got brought back.

[3092] SPEAKER_21: Well, we got brought back sooner, we originally got direction from the board to go ahead and start putting together an RFP. And from the last presentation, I found an example RFP. And we started looking at that. However, this came across our awareness recently. And we thought it was interesting to have SPUR be able to do the RFP. for us, and that saves us a lot of hassle. They have more expertise than we do. We have to assemble a team, have to assemble a committee, and we don't have that local expertise. like SPUR does so I think we brought it back sooner because of this and if the board says well this is nice but you probably should continue with the RFP and you know knowing some of the things you learned or if the board says no we'd like to go down this road then that would give us to go ahead to go ahead and pursue the contract knowing that in essence by following the SPUR program we've done an RFP it's included it's a faster track to get where the board wants I would like to add certainly Barry's recommendation and perhaps ask him to stay with us through us making the decision. But also I'd like to look at other revenue enhancement components like the EV charging stations. I think that's a good way to potentially make money that might offset some of those other costs and have a more comprehensive approach. But that's kind of the history.

[3175] SPEAKER_37: Okay and then just one final question for you guys. I believe we need to approve this program by a assume date, is that correct?

[3186] SPEAKER_19: Yeah, as mentioned, the federal tax credits are stepping down at the end of this year. So what we're trying to do is procure modules and equipment so that we can safe harbor those tax credits. In order to do that, in the eyes of the IRS, we need to actually take ownership of some of that equipment. And there's lead time. So ideally, the September, October time frame would be. OK. Thank you.

[3206] Ray Rodriguez: Since we started late, so can we try to see? I just have one more, so go ahead.

[3212] Bowen Zhang: So, I want to go back to the battery service payments at 18,000. So, is it the same thing as the storage payment? That is the storage payment. Okay. So, that means, so, newer Memorial High is the only place we're going to store the battery, right? That's right. Okay. So, the entire district, only the Memorial High, we have the 18,000 storage payment for the battery, right?

[3234] SPEAKER_19: Right. And that's just like the solar payment. Instead of buying the solar energy, you're essentially paying for a battery service payment. You're not paying up front for the battery. And the reason that it only works at the high school is because the high school is on an E19 rate tariff, whereas everything else is on an A10 or an A1 rate tariff, which is meant for a smaller school, like an elementary school. And at those sites, you don't have really expensive demand charges, so the battery has a much higher hurdle to cross to become economical. It's only at the high school where you have the big boy rate tariff that the battery will work.

[3265] Bowen Zhang: And last question, what is that zero percent escalator mean?

[3270] SPEAKER_19: So that means that the rate that you're going to buy the solar energy for under the terms of the contract is set and flat for 20 years. So in year one, you're going to pay, you know, $0.10 a kilowatt hour as an example. And then in year 20, you're also going to be paying $0.10 a kilowatt hour, whereas PG&E rates tend to go up over time. And then as CBO was mentioning earlier, you know, really the savings calculations are predicated on that number that you're assuming that utility rates are going to go up over time. And we've assumed a very conservative, fair rate that's based on historical, empirical data. So, it's not aggressive. We hope to come back and say this saved more than we expected because PG&E rates went up faster than we expected.

[3312] Ray Rodriguez: So, after the first presentation, the hope was that we would, you know, do the RFP and get on it right away and then things happen and, you know, time's gone by and I'm not happy with that. But the fact is that I'm happy that you're here, and we really need to make a decision on this. We've been talking about doing solar for Newark for years, and it's, you know, but, you know, we have three board members, and two are missing, so all three of us would have to agree in order to move forward. So the only question I had is involve fees. I would rather get something to where if we use the savings to pay the fees so the district isn't paying anything. So I would like to see if we can get a figure on that. Is there anything that we have to pay, like the inspector of record?

[3365] SPEAKER_20: We do have the district, because it's on your property. You have to pay the inspector of record. But as they said, they will be willing to finance that for you and pay for it out of the energy savings, which is going to make that charge a little bit different. It could go down to a 10% savings versus 22%.

[3382] Ray Rodriguez: No, that's fine. I'm just trying to find a way to zero it out to where One scenario would be that we don't pay anything, whether it's finance or whatever. And the other one where we pay something and then naturally have more savings. I'd rather have it just personally me so that we don't pay anything. If there's a way to do that. But let me just finish one more thing. If we do decide that we're going to pay something, what fund would that come out of? Where would that money come from?

[3417] SPEAKER_20: I think that would have to be determined. You have some options. And we wouldn't bring one proposal back to the board. I'd like to provide the board with some options. One would be the one you suggested. Fully paid, reimbursed, likely a 10% savings in your energy, or somewhere in that vicinity. Lower than the 22% they were presenting. The other would be the 22% savings, but you would have to come up with x cash. for the IOR or the batteries or whatever it might be. And there might be even a third option. Maybe somewhere in between. It's possible. But that is developing the contract with your partner. And I also think it's important for the board to know this is not a low bid item where you go out and you're going to have a fence repaired. You get three bids and you pick the one that's lowest. The law provides the board the opportunity very much like an attorney or an accountant, your accounting firm. you can have the authority to pick the one you want that meets your needs the best.

[3480] Ray Rodriguez: So how do we get this on the fast track so the board can make a decision on it so we can move forward?

[3484] SPEAKER_21: I think the board majority now gives us direction to go forward and bring back some options we can do that.

[3489] SPEAKER_37: One final question before we do go on that vote, because again, just to clarify what I will be voting on is, if we move forward with them, it's still going to go to you guys. Mr. Schimel, you will be reviewing the contract and then you will come back to let us know exactly what either fees incurred less and what we're going to be, what the contract's going to look like?

[3510] SPEAKER_20: Your action tonight actually is a recommendation to the superintendent to move forward with this. That's all you're doing. I would then work with the superintendent, get some direction from the superintendent, and he would tell me this is the way you want to develop it. I would begin working with this firm, and it might come that way. Likely, I'm going to look at that contract and bounce it off of a couple other people that I know and see if that's reasonable by industry standard. And if it is, since they put all the legwork and Mitsui's going to be funding it, it's a very competitive market and I see no reason why we couldn't move forward. But we would bring you that contract and spend a study session going through that contract, especially with the examples that I talked about.

[3562] SPEAKER_37: Thank you very much.

[3563] Ray Rodriguez: So you need direction from us then? It doesn't really have to be a vote, because we don't normally. And then you're going to bring it back as soon as. And we're thinking at what, the first meeting in September, or is that enough time, or how much time do you need?

[3582] SPEAKER_20: Because we're going to involve legal, I would think. Legal is always involved in everything. You're probably looking towards the end of September. I would hope to put this pretty much together before I leave, which might be the first meeting in October, depending on how, depends on what legal says. And then they say, you need this in there. And Forefront says, we can't put that in there. That's where the negotiation comes along.

[3609] Ray Rodriguez: And there's no cost to us right now going through that process, right? Other than your attorney, right? Attorney legal. Other than legal. OK. OK. Board?

[3617] SPEAKER_37: I'm a board. OK. We can move forward.

[3620] SPEAKER_21: Yeah.

[3622] Ray Rodriguez: So you got it.

[3623] SPEAKER_21: Thank you.

[3625] Ray Rodriguez: We have your business cards and everything. You have it? Yes I do.

[3637] SPEAKER_37: Thank you.

[3639] Ray Rodriguez: Our graphics department is the best and if you need more business cards that's where you want to get them.

[3644] SPEAKER_21: Thank you.

[3654] Ray Rodriguez: we're going to close the public comment. Study session. So now we go to 3.2 public comment on closed session items we have. 2 individuals is that correct. This park did you want to come up.

[3682] Cindy Parks: I'm here talking about the high school principal position. I think you've got a conglomerate there of items for the closed session. Since the job was no longer posted for the high school principal, what was the hiring process for the current candidate? The closed ed joined job posting for the Newark Memorial High School principal position stated that you wanted a minimum of two years of experience as a secondary principal. The job description itself stated two to six years experience as an assistant principal. I think everyone would agree that there are reasons this position would require prior experience as an assistant principal or experience as a principal. Having the oversight of 1,700 students and approximately 150 staff, certificate and classified, I'm just guessing, is quite daunting. I don't know how many, I don't know many who would disagree that it's always exciting to be able to promote from within. All of that being said, if I understand correctly who you would be recommending for this position, I would hope steps would be put into place to provide her with a good mentor, which she will need to secure a clear administrative credential. I would also hope that she receives the necessary support to carry out the job without incurring additional expense to the district, as was the case with the CBO who recently resigned. Thank you.

[3762] Ray Rodriguez: Thank you. Thank you much. Well said. Mr. Hill?

[3778] Aiden Hill: My name is Aiden Hill, and I've been a homeowner here in Newark for the past 18 years. And in terms of career, I've spent the last 25 years in business, helping Fortune 500 companies run global mission-critical projects, many of which I was brought in to save from failure. Recently, however, I've had a deep desire to come and give back to our community, and so now I've embarked on a career change to become a teacher here at Newark Memorial High. I began summing at Newark Memorial this past spring, and I'm currently enrolled full-time in San Jose State's single subject teacher credential program. The reason I'm speaking to you today is to ask for your help. As a corporate turnaround expert, I'm very familiar with dysfunctional cultures and how they stand in the way of an organization's success. And as I have begun interacting with Newark Unified, I can tell you we have a problem. From an overall perspective, there seems to be little dedication to customer service. It took me over six months to get an emergency credential to sub at Newark High, despite the chronic need for subs. And during that process, I encountered rude and often incompetent employees uninterested in helping me. During the application process, which at one point got completely lost, I was bounced from person to person with phone messages left unanswered and no responses to my emails. To be fair, not everyone behaved in this fashion. As things stalled, Nancy Thomas on the board helped to champion my cause, and both Mark Neal and Jessica Saavedra did their best to help me satisfy my needs. But they were the exception rather than the rule. And sadly, one of the worst offenders in all of this was Superintendent Sanchez. I reached out to him and his office on numerous occasions, both via phone and email, but never got a reply back. Disappointingly, once I got my emergency credential, things didn't get better. As I began my subbing experience at Newark High, I further saw how the district's dysfunctional culture was seeping down to the school level. Many of the office staff were also rude and unhelpful, and with the removal of Paul Bretz, there seemed to be no leadership. These issues have since trickled down to teachers, many of whom appeared discouraged and spoke of leaving. Worst of all, however, this dysfunction has now made its way to the students. When leadership is absent, chaos usually ensues, and that's what I experienced at Newark High, kids who felt that they had been abandoned and acted out as a result. The environment became so toxic that by the end of the school year, I was turning away subassignments because the experience had become completely demoralizing. So my request to you, as the governing body of our school district, is to help turn this ship around. I do not know Mr. Bretz. We've only met once. But he seems like an experienced leader who can help resurrect our failing high school. He may have made mistakes. We all do. But you have withdrawn charges against him, and in this country, we are innocent until proven guilty. You should reinstate him on a probationary term and give him a second chance to prove himself. But where we really need your help is in transforming our dysfunctional culture into a high-performing one. here in the literal center of Silicon Valley, we should expect no less and no long-term school or district employment contract should be inked or renewed until we've seen significant and measurable progress towards achieving this goal.

[3972] SPEAKER_10: Thank you.

[3973] Ray Rodriguez: And I, before you go, sometimes we just get caught up in what we're doing, but what the intent is, is to let you know when 20 seconds are up so you can kind of, you know, rather than get to the end where we're, you know, and. Because we want to be courteous, and you've taken time to be here, and we want to make sure that whatever comments you have are heard.

[3996] SPEAKER_10: OK? I appreciate it. And I appreciate you. That's my statement, and I appreciate it. Thank you for being a teacher. I appreciate it. OK, thank you. Thank you.

[4006] Ray Rodriguez: OK, do we have anything else? OK, with that, we'll go to closed session at 6.13.

No minutes available.