Modesto picks brighter deal on streetlights

A company that warned Modesto in June that it was about to pay a competitor too much to replace streetlights is about to land the work for itself and at a cost that will save the city $2 million.

Modesto is expected to enter into a contract within days with San Francisco-based Tanko Lighting to replace nearly 9,500 high-pressure sodium streetlights with light-emitting diodes, which use less energy, last longer and officials say will save the city about $528,000 annually on its electric bill. They also produce a softer, whiter light than the high-pressure sodium lights.

Tanko will do the work for $3.2 million. Global giant Siemens Industry proposed doing the work for $5.2 million in June.

Modesto worked with Siemens for about 17 months in developing the project, which included other energy upgrades, such as replacing the lighting at city facilities. The project cost $8.4 million, with the streetlights making up the bulk of the work. Siemens was going to lend Modesto the money for the project at 2.75 percent interest, which would have increased the total cost to $10.4 million.

Council members were poised to enter into an agreement with Siemens in June when Tanko Lighting President Jason Tanko spoke against it, telling council members they were paying too much for the streetlights and urged them to put that part of the project out to bid.

He did not get a warm welcome. Mayor Garrad Marsh told Tanko he did not appreciate his coming before the council at the last minute, though Tanko said Siemens had just released its pricing information. Some council members said they trusted Siemens and city officials, and wanted to move forward.

Tanko was not the only person with concerns. Some city staffers had been questioning the deal’s cost for a while but had not been able to stop it. The deal fell apart at a subsequent council meeting after city officials recommended against it because of their concerns about the project’s cost and financing.

City Manager Jim Holgersson said Modesto will pay for replacing the streetlights with its own money, which will save the city the expense of paying interest if it borrowed the money. He said the money will come from Modesto’s surface transportation fund. The fund pays for streetlights, traffic signals, streets and roads, sidewalks and similar infrastructure.

Barring unexpected weather delays, the streetlights should be changed out by June. Tanko is serving as the project manager and will conduct a streetlight audit, design the project and oversee the work. It will hire two local subcontractors – Collins Electrical and United Sign Systems – to replace the streetlights.

After the Siemens deal unraveled, Modesto started over with just replacing the streetlights. The city used a competitive process in which Tanko, Pacific Gas and Electric Co. and Siemens vied for the work. Tanko came out on top based on cost, experience, how quickly the work would be done and use of local contractors.

Tanko proposed doing the work for $3.2 million, PG&E for $3.5 million and Siemens for $4 million.

Jason Tanko said his company has replaced more than 150,000 streetlights in the past three years in such communities as Hayward, Napa and Berkeley. He said he had an obligation to speak out in June.

“We just knew that ethically, morally, that this was way more expensive than it should be,” he said. “Whatever came out of that, we felt we had an obligation to tell the city. We did it not expecting an outcome favoring us. I didn’t expect we’d get the work. We knew that was possible, but that was not our expectation.”

This story was originally published October 30, 2014 at 7:02 PM with the headline "Modesto picks brighter deal on streetlights."