DEPARTMENT: Facilities Management
FILE TYPE: Regular Action
TITLE
title
Authorization To Execute Contract With McKinstry Essention, LLC, For Energy Improvements Project Phase Two Investment Grade Audit
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PURPOSE/ACTION REQUESTED
Authorize execution of a contract with McKinstry Essention, LLC, for an Investment Grade Audit (IGA) for the Phase 2 Energy Improvements project.
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 $2.3 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 18 percent.
Building on the success of Phase One, staff have continued the partnership with McKinstry Essention, LLC (McKinstry) to explore options to maximize the County's return on investment in additional energy projects. McKinstry reassessed all County facilities and another set of projects estimated to save an additional 10 to 15 percent on top of Phase One savings. These include solar at five sites, mechanical upgrades at eight to 10 buildings, HVAC retrocommissioning at more than 15 buildings, and building envelope sealing at 15 to 20 buildings (Attachment: Presentation Slides). This scope is estimated to cost between $4,000,000 to $4,500,000 and represents the best value to the County for the work to be performed.
The next step in this process is to sign a contract in an amount not to exceed $155,500 for an IGA with McKinstry Essention, LLC (Attachment: DRAFT Investment Grade Audit). This will position the project to seek utility rebates and state and federal funding sources, which will shorten the project's return on investment and increase the net present value.
If the County elects not to continue with the full project after the IGA, the fee to McKinstry would be paid from the Energy Efficiency Program budget in the Facilities Capital Improvement Program. If the County moves forward with the projects after the IGA, the fee is incorporated into the overall project cost. At this time, staff believe that the best approach for financing this type of energy savings program is through a Tax-Exempt Lease Purchase (TELP) loan, which would be obtained through a private lender and would be repaid by the County's energy savings over the term of the loan. If the IGA indicates that this program should move forward, staff will return with an RBA to seek approval to enter into a TELP loan for this project
RECOMMENDATION
recommendation
Staff recommends execution of a contract with McKinstry Essention, LLC, for an Investment Grade Audit in an amount not to exceed $155,500 for Phase Two as presented and attached.
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EXPLANATION OF FISCAL/FTE IMPACTS
The project funding is planned to be a Tax-Exempt Lease Purchase loan through a private lender to be managed by Finance and paid for by energy savings over the term of the loan. If the County elects not to continue with the full project after the IGA, the fee to McKinstry would be paid from the Energy Efficiency Program budget in the Facilities Capital Improvement Program.
☐ None ☐ Current budget ☒ Other
☐ Amendment Requested ☐ New FTE(s) requested
RESOLUTION
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WHEREAS, Dakota County operates over 1.6 million square feet of buildings, consuming $2,300,000 in annual energy expenses in 2023; and
WHEREAS, the Phase 1 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 data from 2023 to 2024 showed a decrease in consumption of 7.7 percent and a cost reduction of 18 percent; and
WHEREAS, building on the success of Phase 1, staff have 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 another set of projects estimated to save an additional 10 to 15 percent on top of Phase 1 savings; and
WHEREAS, these include solar at five sites, mechanical upgrades at eight to 10 buildings, HVAC retrocommissioning at more than 15 buildings, and building envelope sealing at 15 to 20 buildings; and
WHEREAS, this scope is estimated to cost between $4,000,000 to $4,500,000 and represents the best value to the County for the work to be performed; and
WHEREAS, the next step in the process is to sign a contract for an Investment Grade Audit with McKinstry Essention, LLC to position the project 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 in an amount not to exceed $155,500 with McKinstry Essention, LLC, to perform an Investment Grade Audit for Phase 2, subject to approval by the County Attorney’s Office as to form.
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PREVIOUS BOARD ACTION
None.
ATTACHMENTS
Attachment: DRAFT Investment Grade Audit
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