Title
Resolution to Accept and Appropriate Grant Funds from the U.S. Department of Energy to support a Community Geothermal Installation in the Bryant Neighborhood and to Approve an Assistance Agreement with the U.S. Department of Energy ($10,778,167.00) (8 Votes Required)
Memorandum
Attached for review and consideration is a resolution to authorize the acceptance and appropriation of grant funding from the U.S. Department of Energy to support the creation of the City’s first networked geothermal system in the Bryant neighborhood. This resolution also authorizes the signing of an Assistance Agreement with the U.S. Department of Energy to implement said project.
In late 2023, the City of Ann Arbor’s Office of Sustainability and Innovations (OSI) won a planning grant from the U.S. Department of Energy to design a district energy system in the Bryant neighborhood capable of reducing thermal heating and cooling load by 75% (R-23-378). The design project involved extensive engagement with the residents of the Bryant neighborhood, Ann Arbor Public Schools, Washtenaw County, IMEG, Community Action Network, Midwest Geothermal Energy Association, International Ground Source Heat Pump Association, International Brotherhood of Electrical Workers Local 252, U.A. Local 190, Michigan Energy Services, Arbor Consultants, D4 Consultants, Midwest Geothermal, DTE Gas, and the University of Michigan. Through the project, the team was able to design a system capable of providing all the heating and cooling load for the residents of the Bryant neighborhood and, when stacked with energy efficiency and other renewable energy deployment, the designed system will be capable of reducing energy usage and associated costs for Bryant residents by over 70%.
Upon completion of the project design, OSI and collaborators submitted a proposal to the U.S. Department of Energy to fund a portion of the designed system. Specifically, OSI applied to build a well field and pump house capable of powering the entire 262 homes in the neighborhood but only doing the road work and home conversions for slightly over 100 households. The application was sized at this level because the grant award amount could not exceed $10,000,000.00 (the City was unexpectedly awarded more) and the City was required to bring at least a 50% match. Given these parameters, the City submitted a package totaling an estimated $22,123,145.00 (for the full well field, pump house, and installation of geothermal in just over 100 households). This also means that the City will have to secure capital to cover the remaining project costs, which is the first task (as noted below) in the City’s proposed work plan. Importantly, now that the Sustainable Energy Utility (SEU) is authorized, this geothermal system will become an asset of the SEU and owned by the City.
In terms of potential financing, as part of its grant application, the City secured and submitted letters of commitment from multiple entities/organizations that were interested and willing to bring this remaining capital to the project. And since the grant application was submitted, other potential funders have been identified. To find the most viable funding partner, the City plans to issue a request for proposals for financing collaborators shortly after execution of this grant award. More details about this will be presented to Council after a competitive process is undertaken.
About two months after the City submitted its grant application, OSI was alerted that the Department of Energy had selected the City’s application for funding. Negotiations immediately began with the City pulling together all the requisite information. However, negotiations were delayed with a change in U.S. Presidents. Months passed with no updates from the U.S. Department of Energy. Then, in late summer of 2025, a liaison from the Department of Energy reached out to begin negotiations again.
Over the last several weeks, staff in the OSI have been working with the project team to update, refresh, and finalize all project components for resubmittal to the U.S. Department of Energy. These updates were accepted by the U.S. Department of Energy and a final grant agreement was shared with the City in late September. In total, the U.S. Department of Energy proposes awarding the City $10,778,167.00 in funds to advance the networked geothermal system as outlined in seven main tasks:
• Secure remaining system financing
• Finalize designs and permitting (lead is IMEG)
• Advance workforce development strategy (lead is UA190)
• Continue ongoing public engagement (lead is Community Action Network)
• Conduct all competitive bidding for construction of system
• Construct system
• Test and commission system
At this time, the City is seeking approval from Council to receive and appropriate the grant funds and to sign an assistance agreement with the U.S. Department of Energy to support the installation of a community geothermal system in the Bryant neighborhood in Ann Arbor.
Budget/Fiscal Impact: Staff in the Office of Sustainability and Innovations will be providing in-kind support for the project. In addition, the City will have to secure external financing support to complete the full project. However, this task is built into the grant and, as such, costs will be covered through the funds available.
Staff
Prepared by: Missy Stults, Sustainability and Innovations Director
Reviewed by: Valerie Jackson, Assistant City Attorney - Sustainability
Reviewed by: Shoshannah Lenski, Sustainable Energy Utility Executive Director
Reviewed by: Kim Hoenerhoff, Financial Analyst
Reviewed by: Marti Praschan, Chief Financial Officer
Approved by: Milton Dohoney Jr., City Administrator
Body
Whereas, The City’s A2ZERO work focuses on equitably decarbonizing as many homes and businesses as possible;
Whereas, Staff in the Ann Arbor Office of Sustainability and Innovations worked with numerous community stakeholders, including Washtenaw County, Ann Arbor Public Schools, Community Action Network, and many others to design a project that would allow us to work directly with residents to design a district geothermal system;
Whereas, The project team put together a grant application to the U.S. Department of Energy to fund the installation of a significant portion of the designed geothermal system in the Bryant neighborhood;
Whereas, The U.S. Department of Energy selected the City’s grant application for award;
Whereas, The Ann Arbor Sustainable Energy Utility was authorized by the voters in November 2024 and formally created on April 17, 2025 via the enactment of the Sustainable Energy Utility enabling ordinance; and
Whereas, The Sustainable Energy Utility was authorized to develop and operate geothermal systems;
RESOLVED, That City Council accept a grant award of $10,778,167.00 from the U.S. Department of Energy to support the installation of a Community Geothermal System in the Bryant neighborhood, to be owned and operated by the City’s Sustainable Energy Utility;
RESOLVED, That City Council appropriate $10,778,167.00 to the FY26 Major Grants Program Fund Sustainability expenditure budget with the source of revenue being the U.S. Department of Energy for the purpose of advancing the Community Geothermal System in the Bryant neighborhood;
RESOLVED, That any remaining funding in the FY26 expenditure budget related to this grant award be carried forward without regard to fiscal year;
RESOLVED, That City Council approve and authorize the execution of an Assistance Agreement with the U.S. Department of Energy for these funds;
RESOLVED, That the Mayor and Clerk are authorized and directed to execute the Assistance Agreement following approval as to form by the City Attorney and as to substance by the City Administrator; and
RESOLVED, That the City Administrator is authorized to take all appropriate actions to implement this resolution.
Sponsored by: Mayor Taylor and Councilmembers Radina and Ghazi Edwin