DEPARTMENT: Facilities Management
FILE TYPE: Regular Action
TITLE
title
Authorization To Execute Contract With McKinstry Essention, LLC, For Energy Improvements Project Phase Two
end
PURPOSE/ACTION REQUESTED
Authorize execution of a contract with McKinstry Essention, LLC, for the Energy Improvements Project Phase Two.
SUMMARY
Dakota County operates over 1.6 million square feet of buildings, including 10 libraries, three service centers, detention and 911 centers, maintenance facilities, and dozens of park buildings and structures. These facilities consume electricity and natural gas, totaling the taxpayers $2.25 million in annual expenses in 2023.
The Phase One Energy Improvements project converted over 14,000 lights to LED, added approximately one megawatt of solar across four sites, and completed HVAC retrocommissioning work at the Northern and Western Service Centers. The lighting and HVAC work was completed over the course of 2024 with the solar coming online in February and March 2025. Countywide facilities energy data from 2023 to 2024 showed a decrease in consumption of 7.7 percent and a cost reduction of $263,000 equaling 12 percent. The completed work in 2025 added another $227,000 in savings, reducing total electricity and natural gas expenses to $1.76 million for 2025. Note these numbers are total expenses countywide and have some consideration for the variability in overall energy market pricing.
Building on the success of Phase One, staff has continued the partnership with McKinstry to explore options to maximize the County's return on investment in additional energy projects. By Resolution No. 25-457 (September 23, 2025), McKinstry performed an Investment Grade Audit in which they reassessed all County facilities for energy savings potential. The Phase Two project will save an additional 10 to 12 percent on top of Phase One savings. Note that these savings are based on buildings where the work is performed, and the bills specifically associated with each of those buildings, not the total county energy costs.
These include rooftop solar at five sites, mechanical upgrades at three buildings, water conservation measures at 16 buildings, and building envelope sealing at 19 buildings. This scope represents the best value to the County for the work to be performed. The County will pay $250,000 for this project up-front and is guaranteed savings of $104,000 per year in energy and water costs. Those savings will be used to pay the Tax-Exempt Lease Purchase (TELP) loan used to finance the remainder of the project costs. After factoring in the cost of filing for a federal tax credit available through the Inflation Reduction Act, the net present value of the savings that the County will realize are estimated to come to $280,000 - more than the initial investment in the project.
These efforts support strategy 2A2C in the Dakota County Groundwater Plan to conduct water use/efficiency/conservation audits at all County Facilities and align with the direction the County Board provided by Resolution No. 22-068 (February 22, 2022). The resolution states That the Dakota County Board of Commissioners herby affirms and formally adopts a strategy of investing in energy conservation measures when the payback on those investments is equal to or less than the life expectancy of the investment when County levy funds are the primary source of funding.
The total project cost and contract with McKinstry is $3,081,374 which is funded by $250,000 of levy in the 2026 Adopted Facilities Capital Improvement Program and $2,831,374 from a Tax-Exempt Lease Purchase loan coordinated by Finance and a third-party financial institution.
RECOMMENDATION
recommendation
Staff recommends execution of a contract with McKinstry Essention, LLC, for the Energy Improvements Project Phase Two as presented and attached.
end
EXPLANATION OF FISCAL/FTE IMPACTS
The Facilities 2026 - 2030 Adopted Capital Improvement Program includes a project for Energy Efficiency Improvements and a levy budget of $250,000, which is the only county funding for this project. The County provides $250,000 in capital and will finance the balance of the project with the energy savings over the 20-year term guaranteed to cover the cost of the investment per Minn. Stat. § 471.345, Sub. 13. The Tax-Exempt Lease Purchase loan will be in the amount of $2,831,374 for a total project cost of $3,081,374.
☐ None ☒ Current budget ☒ Other
☐ Amendment Requested ☐ New FTE(s) requested
RESOLUTION
body
WHEREAS, Dakota County operates over 1.6 million square feet of buildings consuming $2,250,000 in annual energy expenses in 2023; and
WHEREAS, the Phase One Energy Improvements project converted over 14,000 lights to LED, added approximately one megawatt of solar across four sites, and completed HVAC retrocommissioning work at the Northern and Western Service Centers; and
WHEREAS, the lighting and HVAC work was completed over the course of 2024 with the solar coming online in February and March 2025; and
WHEREAS, countywide facilities energy costs decreased due to the Phase One project, and to a smaller extent, lower energy market prices; and
WHEREAS, countywide costs were $2.25 million in 2023, $1.99 million in 2024, and $1.76 million in 2025; and
WHEREAS, countywide cost reductions were 11.6 percent from 2023 to 2024; and
WHEREAS, countywide costs were reduced another 11.4 percent from 2024 to 2025; and
WHEREAS, building on the success of Phase One, staff has continued the partnership with McKinstry to explore options to maximize the County's return on investment in additional energy projects; and
WHEREAS, McKinstry reassessed all County facilities and the Phase Two project will save an additional 10 to 12 percent on top of Phase One savings; and
WHEREAS, this project includes rooftop solar at five sites, mechanical upgrades at three buildings, water conservation measures at 16 buildings, and building envelope sealing at 19 buildings; and
WHEREAS, this scope represents the best value to the County for the work to be performed; and
WHEREAS, the County will pay $250,000 for this project up-front and is guaranteed savings of $104,000 per year in energy and water costs; and
WHEREAS, those savings will be used to pay the Tax-Exempt Lease Purchase (TELP) loan used to finance the remainder of the project costs; and
WHEREAS, after factoring in the cost of filing for a federal tax credit available through the Inflation Reduction Act, the net present value of the savings that the County will realize are estimated to come to $280,000 - more than the initial investment in the project; and
WHEREAS, the total project cost and contract with McKinstry is $3,081,374 which is funded by $250,000 of levy in the 2026 Adopted Facilities Capital Improvement Program and $2,831,374 from a Tax-Exempt Lease Purchase loan coordinated by Finance and a third-party financial institution; and
WHEREAS, staff is recommending approval of the Energy Improvements Project Phase Two; and
WHEREAS, this project represents the best value to the County for the work to be performed and meets the expectations of staff and the County Board for capital expenditures on energy improvements; and
WHEREAS, the completion of the Energy Improvements Project Phase Two will position the County to seek utility rebates and state and federal funding sources, which will shorten the project return on investment and increase the net present value.
NOW, THEREFORE, BE IT RESOLVED, That the Dakota County Board of Commissioners hereby authorizes the Facilities Management Director to execute a contract with McKinstry Essention, LLC, in an amount of $3,081,374, to perform the Energy Improvement Project Phase Two subject to approval by the County Attorney’s Office as to form.
end
PREVIOUS BOARD ACTION
22-068; 2/22/22
25-457; 9/23/25
ATTACHMENTS
Attachment: Project Summary
Attachment: Presentation Slides
BOARD GOALS
☐ Thriving People ☐ A Healthy Environment with Quality Natural Resources
☐ A Successful Place for Business and Jobs ☒ Excellence in Public Service
CONTACT
Department Head: Mike Lexvold
Author: Mike Lexvold