Agenda Memo

City of Boulder City Council Agenda Item Meeting Date: March 5, 2026 Agenda Title Introduction, first reading and consideration of a motion to order published by title only Ordinance 8740 amending Sections 3-1-1, “Definitions,” and 3-17-8, “Duties and Powers of City Manager,” B.R.C. 1981, extending sales and use tax rebate and setaside program to battery systems; and setting forth related details

Staff Contact • •

Carolyn Elam, Sustainability Senior Manager, Climate Initiatives Jonathan Koehn, Climate Initiatives Director

Draft Motion Language Staff requests council consideration of this matter and action in the form of the following motion: Motion to introduce and order published by title only Ordinance 8740 amending Sections 3-1-1, “Definitions,” and 3-17-8, “Duties and Powers of City Manager,” B.R.C. 1981, extending sales and use tax rebate and set-aside program to battery systems; and setting forth related details.

Executive Summary Power resiliency is a 2026 Council Priority (see page 14). Recent Public Safety Power Shutoffs (PSPS) and increasing wildfire risk have highlighted the vulnerability of Boulder households, particularly those reliant on medical equipment or sensitive to temperature extremes. The city currently provides a sales and use tax rebate and set-aside program for solar photovoltaic and solar thermal systems. However, standalone battery systems, which provide critical backup power and grid resilience, are not explicitly eligible.

Ordinance 8740 is a concept raised by community members in community engagement after the most recent PSPS. It would remove this policy gap by extending the existing rebate and set-aside structure to standalone battery systems. Battery systems, particularly when paired with solar, can power essential devices, such as refrigerators, lights, and medical equipment, during a power outage and contribute to overall grid resilience.

Council Action Options Option

Outcome

Approve motion language as drafted

If the motion is approved, it will proceed to Second Reading and a Public Hearing, currently scheduled for the City Council Meeting on April 2, 2026.

Define and adopt a modified motion

Council would need to define any modifications or amendments to the draft motion language. This will likely require staff to bring back an amended version.

Deny the motion or take no action

The amendments would not be adopted.

Refer back to staff

If council refers this item back to staff, more direction would need to be given.

Alignment with City Plans and City Council History Sustainability, Equity and Resilience (SER) Framework and Citywide Strategic Plan Alignment SER Framework Goal Area Livable: Encourages sustainable and well-regulated development of buildings supported by reliable and affordable city services and public infrastructure. Environmentally Sustainable:  Accelerates progress towards the community’s ambitious climate and energy goals through a culture of shared environmental stewardship across Boulder; and  Provides affordable programming to diverse populations to increase access to and participation in local climate actions. Citywide Strategic Plan Safe. Strategy 2. Advance efforts to enhance regional disaster prevention, preparedness and response that leverage existing partnerships and prioritize city investments.

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Priority Action: Expand efforts in preparedness and resilience strategies, including the completion, socialization, and implementation of the Community Wildfire Protection Plan for all community members.

Livable. See Staff Notes below. Environmentally Sustainable. Strategy 9. Increase community and ecosystem resilience to the current and future impacts of climate change. •

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Priority Action: Relaunch our adaptable, long-term, and holistic resilience strategy - that encompasses economic, environmental, community, and infrastructure components to complement implementation of resource and ecosystem management plans. Priority Action: Design and launch tools that align the city’s climate actions with community members most impacted from climate-related risks.

Strategy 10. Continue advancement toward the city’s goal of an 80% reduction in emissions and the community’s goal of a 70% reduction by 2030. 

Priority Action: Expand efforts that eliminate carbon from (“decarbonize”) the built environment, vehicles and operations, and replace fossil fuel-based energy systems.

Staff Notes Regarding Safe, Strategy 2, “Priority Action a,” the proposed code update would increase the preparedness and resilience of Boulder households, including those living in affordable housing, and the nonprofits that serve them. Regarding the Livable goal area of the Citywide Strategic Plan, though there are no strategies or priority actions directly related to Ordinance 8740, the goal area is described as “High-performing, safe, and well-maintained buildings and infrastructure that accommodate a diverse set of community needs for working, learning, playing and living.” Ordinance 8740 would promote high performing and safe buildings. Incentivizing the purchase of battery systems and setting aside a portion of sales and use tax for affordable housing and nonprofits advances environmental sustainability by reducing greenhouse gas emissions and advancing grid and household resilience, especially for community members most at-risk of climate-related impacts.

Alignment with Additional City Plans Other policies in city plans advanced by the Healthy Buildings, Stronger Community Roadmap include:

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The Boulder Valley Comprehensive Plan o 3.32 Protection of Air Quality; o 4.01 Climate Action: Reduce Greenhouse Gas Emissions; o 4.03 Energy Conservation and Renewable Energy; o 4.06 Energy System Resilience; o 4.08 Energy-Efficient Building Design; and o 8.03 Equitable Distribution of Resources. Climate Action Plan o Achieve regional and national climate targets; o Center equity; and o Builds resilience.

City Council History This is the first time Ordinance 8740 has come before City Council. However, City Council identified power resiliency, particularly issues related to timing and barriers, as a 2026 Priority. This priority seeks to meet the community’s energy needs with fewer negative impacts.

Analysis Xcel Energy’s electric grid in and near Boulder faces elevated wildfire ignition risk due to aging infrastructure, mountainous terrain, and increasingly dry and windy conditions. A key concern is power lines sparking during high winds and igniting rapidly spreading wildfires. To mitigate this risk, Xcel Energy plans to invest $1.9 billion from 2025 to 2027 in undergrounding lines, enhanced vegetation management, and implementing Public Safety Power Shutoffs (PSPS). However, PSPS, which are implemented in areas of heightened grid instability, have negative impacts, including disruption of medical equipment, loss of heating and cooling, food spoilage and replacement costs, and the potential need for temporary alternative housing. These impacts are disproportionately borne by low-income community members. The idea for this code amendment arose from recent community engagement after the most recent PSPS. While grid instability persists and PSPS remain a key wildfire mitigation tool, battery systems can enhance both grid and community resilience. The city code currently provides a sales and use tax rebate for the purchase of solar photovoltaic and solar thermal systems and sets aside a portion of the taxes collected to fund similar equipment for housing serving low- and moderate-income households and nonprofits through city-issued grants. While batteries that are included with the solar photovoltaic installation are considered part of the solar installation and, therefore,

eligible for tax rebate, the code does not extend this rebate and set-aside structure to standalone battery system purchases, even when such purchases are to add batteries to an existing solar installation. City Council has identified power resiliency, especially issues related to timing and barriers, as a 2026 Priority. The proposed amendment would better align Title 3, “Revenue and Taxation,” B.R.C. 1981, with the city’s power resiliency priority and reflect the consumer practice of purchasing battery systems, now that battery systems are becoming more affordable. Staff estimates the typical cost of a residential battery system at $12,000 to $14,000 and a small commercial system at approximately $50,000. The potential rebate would remain at approximately 15% of city sales and use tax collected. Staff anticipates standalone battery system purchases in the single digits in a given tax year and therefore have no to minimal impact on sales and use tax projections.

Equity Analysis 1. What equity analysis tool or methodology was used? This ordinance concept arose from recent community engagement related to PSPS. To be responsive, a rapid racial equity assessment was performed. 2. Who will benefit or be burdened by the ordinance and what are the positive and negative impacts the ordinance may have on the community? While the total number of standalone battery purchases is expected to be limited, the benefits are disproportionately significant for vulnerable populations, including low-income households, residents dependent on durable medical equipment, and communities disproportionately impacted by outages and extreme weather events. Grid resilience disproportionally impacts low-income and racially and ethnically diverse community members such as those living in the Boulder Meadows manufactured home community. The set aside would benefit those living in lowand moderate-income housing and nonprofits that pursue energy improvements. Within the set-aside fund, grants would also be available to nonprofit entities wishing to serve as community resiliency hubs and for low- and moderateincome residents dependent on durable medical equipment. 3. How does this equity analysis influence the direction of the ordinance? This analysis demonstrates the ordinance is expected to have modest impacts overall yet should promote equity.

Fiscal Note Estimated Fiscal Impact Narrative As noted above staff estimates the typical cost of a residential battery system at $12,000 to $14,000 and a small commercial system at approximately $50,000. The potential rebate would remain at approximately 15% of city sales and use tax collected. Staff anticipates standalone battery system purchases in the single digits in a given tax year. Using the assumptions above for 3 residential projects and 3 commercial projects each year the rebate would be approximately $28,000 to $29,000 per year.

This item requires no additional funds but instead increases the number or type of projects eligible for the rebate program. The revenue from sales tax related to battery installations would become eligible for the rebate/grant program, which can be accommodated in the existing appropriation.

Current Year Estimated Fiscal Impact Fund(s): General Fund Department(s): Climate Initiatives and Finance Program(s):

FY 2026 Budget

FY 2026 Estimated Impact

FY 2026 Net Change

Beginning Fund Balance

$43,506,310

$0

$43,506,310

Total Forecasted Revenue

$198,791,103

($29,000)

$198,762,103

Total Estimated Expenses

$194,483,450

($0)

$194,483,450

Ending Fund Balance(s) After Reserves

$1,871,568

($29,000)

$1,842,568

FTE

N/A

N/A

N/A

Item

Three-Year Estimated Fiscal Impact

Item

FY 2026

FY 2027

FY 2028

Total Forecasted Revenue

($29,000)

($29,000)

($29,000)

Total Estimated Expenses

$0

$0

$0

Net Estimated Impact

($29,000)

($29,000)

($29,000)

Climate, Resilience, and Sustainability Considerations Ordinance 8740 supports the city’s climate action and resilience goals by expanding access to battery energy storage systems. Battery systems enhance community resilience during grid disruptions and Public Safety Power Shutoffs (PSPS), allowing residents and businesses to maintain critical services and reduce reliance on fossil fuel– powered backup generators. By aligning the sales and use tax rebate and set-aside structure for standalone battery systems with existing incentives for photovoltaic and solar thermal systems, the ordinance removes a policy barrier and supports broader adoption of distributed energy resources. Battery storage can improve grid stability, facilitate greater integration of renewable energy, and provide backup power during extreme weather events. This ordinance also advances equity and sustainability objectives by: • • •

Increasing access to resilient energy solutions during outages, particularly for households reliant on medical equipment or sensitive to temperature extremes; Supporting low- and moderate-income households and nonprofits through the existing tax set-aside mechanism; and Encouraging investment in clean energy infrastructure without materially affecting overall sales and use tax projections.

Finally, by recognizing consumer purchasing practices and supporting standalone battery adoption, Ordinance 8740 contributes to Boulder’s long-term strategy to build a more resilient, reliable, and sustainable energy system.

Community Engagement Ordinance 8740 emerged from community engagement after the most recent PSPS that impacted the Boulder community. Staff received multiple inquiries about how the city can support grid resiliency and backup power solutions.

Workplan Considerations The city already administers this rebate and grant program. While this may result in a small increase in applications, it is not expected to have an impact on work volume.

Next Steps for City Council Second Reading and Public Hearing is scheduled on April 2, 2026.

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Attachments A. Ordinance 8740 Amending 3-17-8 Sales and Use Tax Rebate Battery Systems