BOS Agenda Date June 13. 2006

County of Santa Clara
Facilities And Fleet Department

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FAF03 061306

Prepared by: Caroline Judy
Manager, Intragovcmmental
Support Services
DATE:

June 13,2006

TO:

Board of Supervisors

FROM:

Larry Jinkins
Director of Facilities and Fleet Department

SUBJECT: Designate use of Williams Settlement Funds

RECOMMENDED ACTION

Consider recommended actions:

a. Approve the use of funds to proceed with competitive bid processes for consultant and

vendor, and transfer $1.38 million in Williams Settlement funds to Planar Solid Oxide
Fuel Cell Project 263“EN-07001 to meet local match requirements for Department of
Energy Federal Earmark, and transfer remaining Williams Settlement funds to Capital

Project Energy Holding Account 263-ENHOLD to be allocated to previously unfunded
energy conservation projects.
OR,

Board of Supervisors: Donald F. Gage, Blanca Alvarado, Pete McHugh,Jim Beall, Liz Kniss
County Executive: Peter Kutras Jr.

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BOS Agenda Date June 13, 2006

b. Approve delegation of authority to County Executive or designee, to negotiate and
execute sole source agreement with ION America who will provide $1.38 million in
funds for Planar Solid Oxide Fuel Cell Project including all costs associated with
design, construction, installation, system performance and verification testing, and
ongoing system maintenance expenses from June 15, 2006 through project end date of

August 1, 2008 following approval by County Counsel as to form and legality; and
transfer $1.5 million in Williams Settlement funds to a FY 2007 Capital Energy
Conservation Board Identified Program account 263-EN07.

c. Approve delegation of authority to County Executive or designee, to negotiate and
execute Final Agreement and budget documents with the Department of Energy(DOE)
for Planar Solid Oxide Fuel Cell Project Federal Earmark following approval by

County Counsel as to form and legality. Delegation of authority shall expire on August
1,2008.
FISCAL IMPLICATIONS

The County will recognize $1.5 million in FY 2007 resulting from participation in the

Williams Settlement lawsuit. These funds will be recognized in the FY 2007 Recommended

budget, and then transferred based upon Board approval of one of the options listed in the
recommended action.

If the Board approves recommended action "a", then $1.38 million in Williams Settlement
funds will be allocated to Capital Project 263-EN07001 Santa Clara County Planar Solid
Oxide Fuel Cell project and remaining Williams Settlement funds of $120,000 will be
transferred to the Energy Holding account 263-ENHOLD. At the conclusion of the Fuel Cell
project, any unused funds will be transferred to the Capital Project Energy Holding Account
in accordance with the procedures set forth in Board Policy Section 4.14.2(C)(2)(b).
If the Board approves reeommended action "b", then the entire $1.5 million in Williams
Settlement funds will be transferred to a FY 2007 Capital Energy Conservation Board

Identified Program 263-EN07 to be administered in accordance with provisions of Board
Policy Section 4.14.2. The County will enter into a sole source contract with ION America
who will provide all the funds for the Planar Solid Oxide Fuel Cell project.

Board of Supervisors; Donald F. Gage, Blanca Alvarado, Pete McHugh,Jim Beall, Liz Kniss
County Executive; Peter Kutras Jr.

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BOS Agenda Date :June 13, 2006

REASONS FOR RECOMMENDATION

Information regarding the allocation of the Williams Settlement funds came after the County
Executive's preparation of the FY 2007 Recommended Budget. Recommended actions will
allow the County to begin work on the Fuel Cell project using either Williams Settlement
funds or through a vendor contribution.

Administration recommends the Board approve Recommended Action "a". Issuing a

competitive bid will enable opportunities for all vendors to respond to County defined
requirements in an RFP process. A competitive RFP process will require several months to
complete. If the Board approves Recommended Action "a" then Administration will return to
the Board with a vendor selection recommendation in late 2007 / early 2008.

At the Finance and Government Operations Committee(FGOC), Supervisor McHugh

requested further information about sole sourcing the Planar Solid Oxide Fuel Cell project to a
specific vendor. During discussion at FGOC,ION America submitted a letter stating that they
would contribute the entire County match required for the DOE Federal Earmark. If the Board
were to approve action "b" this would alleviate the necessity of using the Williams Settlement
funds for the County match. If the Board approves Recommended action "b" then
Administration will execute a sole source agreement with the vendor, and proceed with the
project design, construction, installation and testing.

Finally, DOE has requested that the County submit the Statement of Project Objectives, final
budget documents and a final agreement by the end of June. This timeline will allow DOE
internal review for approximately one month, and then provide final approval of the project.
Administration is requesting delegated authority to execute the Final Agreement in order to
maintain the project schedule and move as expeditiously as possible with DOE.

RACKGROIJND

In 2002, the County participated in litigation that resulted in a $3.5 million settlement,
commonly referred to as the Williams Settlement, that was specifically designated for

alternative energy generation or energy conservation projects. The County has previously used

$1.9 million of these funds for energy conservation projects in County-wide facilities. The

final payment of $1.5 million will be received in January 2007.

Board of Supervisors: Donald F. Gage, Blanca Alvarado, Pete McHugh,Jim Beall, Liz Kniss
County Executive: Peter Kutras Jr.

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BOS Agenda Date :June 13, 2006

The County is committed to multiple strategies to reduce the impact of increasing energy costs
on operating expenses. These strategies include the adoption of the Green Building Policy,
continuation of funding for capital projects focussed on energy conservation, the Santa Clara
County Fuel Cell Initiative, and continued procurement of alternatively fueled vehicles.
Allocation of the Williams Settlement funds will enable progress towards the broader long
term goals of reducing energy costs.

During Budget Workshops the Board of Supervisors requested additional information relating

to alternative uses of the Williams Settlement Funds. A response to the budget referral has

been prepared by Administration. Funds are required in order to proceed with work on the
Santa Clara County Fuel Cell project, and meet DOE requirements and timelines associated
with the approved $1.38 million Federal Earmark.
CONSEQUENCES OF NEGATTVE ACTION

Administration will not be able to procede with the Santa Clara County Planar Solid Oxide
Fuel Cell project. Williams Settlement funds will not be recognized in the FY 2007 budget.

Board of Supervisors: Donald F. Gage, Blanca Alvarado, Pete McHugh,Jim Beall, Liz Kniss
County Executive; Peter Kutras Jr.

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