Fund transfer pays school bill

Published 9:16 pm Wednesday, July 26, 2017

The school system and city are not currently pursuing a plan that would have provided energy-saving upgrades in their facilities, and that decision has left them with a bill to pay instead.

The City Council voted last week to transfer $275,000 to the capital fund for the school system to use for HVAC improvements after the schools used part of the money originally designated for HVAC to pay the bill.

Trane billed the school system for an extensive audit it conducted on how it could make energy-saving upgrades in school buildings as part of an energy performance contract.

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Energy performance contracting has been a topic of discussion for nearly three years among City Council and School Board representatives. The state-sanctioned process allows government entities to engage one of a number of approved companies to make energy-saving improvements in their buildings and facilities. The company guarantees the energy savings will pay for the debt incurred to do the project; if it doesn’t, the company writes a check for the difference.

Trane offered a $17 million package that they said would save the school division money. However, elected and appointed officials had concern about who would take out the debt and how it would affect the city’s credit rating and financial policies.

“It presented a challenge to borrow any new money this year, either as the city borrowing those funds or authorizing and supporting the school to borrow those,” City Manager Patrick Roberts said in last week’s meeting. “At this time, in this current fiscal year, I’m not prepared to commit to moving forward on that type of project.”

Roberts recommended having the school division pay the bill out of the money the city had provided for HVAC improvements this year, and the city making the division whole on the HVAC money.

Roberts said the money came mostly from savings on debt service.

In a phone interview last week, Roberts said he thinks energy performance contracting is “a great concept” and he supports it if feasible in the future.

“To do it right now would require us to take on more debt than I’m comfortable with and more debt the council is comfortable with,” he added. “That said, the School Board needs to pay Trane for the work that they’ve done. It’s for work that’s been done. It’s a legitimate expense.”

Had the school system moved forward with the energy performance contract, the $275,000 cost would have been rolled into the contract and paid for with the energy savings.

School division spokeswoman Bethanne Bradshaw said this week about the decision, “The School Board was only interested in the project if it was going to be supported by the city.”

Roberts said he was committed to investing in improvements to the school system’s older buildings.

“I really feel like we’re progressing there, and we’re stepping up and helping them with the older facilities, in addition to the two schools we’re building right now.”

The council voted 7-1 in favor of the motion at last week’s meeting. Councilman Mike Duman was the opposing vote.

“Yes, it is very fortunate we have been able to save money,” Duman said in last week’s meeting. “But I’m disappointed that, after much discussion, which has been over two years, the school system did not pursue the implementation of a state guaranteed energy performance contract.

“As far as I’m concerned, the lack of action by the school administration is what’s created this debt,” he added. He estimated the cost would have bought 70,000 reams of paper or provided $550 to each teacher in the system to use at their discretion for supplies.

“I can’t really support this transfer,” he said. “I think we have a responsibility to be vigilant stewards of the taxpayers’ money.”

Councilman Roger Fawcett agreed it was disappointing the contract had not gone through but still supported the transfer.

“I agree with Mike’s stand,” he said during the meeting. “But we’ve got this bill in front of us that’s got to get paid.”

Mayor Linda T. Johnson noted the work done by Trane did generate a report that can be useful in the future.