The city government appears to have found a way to afford the consolidation of offices in the Operations & Service Center and took a significant step toward leaving the Municipal Building during Monday’s City Council meeting.
The council voted unanimously Monday to seek a final proposal from contractor Energy Systems Group for a project of self-financing energy-saving building upgrades that will include closing the Municipal Building and renovating the Operations Center to handle a big move down Beckford Drive.
“This is the only way I can see us being able to, realistically, move to the Operations Center because we don’t have the cash in hand,” City Manager Eric Williams said.
The council took essentially the same action Jan. 28, 2004, when Energy Systems Group was known as Progress Energy Solutions, but the project had a major difference: It included major renovations to the Municipal Building. The whole project stalled over questions about whether the city government should move into the Operations Center and sell the Municipal Building. The revised concept presented Monday by Energy Systems’ Roy Williams would answer those questions by including the shutdown of the Municipal Building as a cornerstone of the project.
“If we could actually shut this building down in the project, we could finance the cost of the Operations Center so there would be no cost to you,” Williams told the council.
Shutting down the Municipal Building would produce a savings of $20,000 a year, City Engineer Frank Frazier said. That money, combined with savings from upgrades at most of the other buildings the city owns, would pay for the entire project of making those upgrades and preparing the Operations Center to serve as City Hall.
Williams’ statement caused a minor eruption on the council. The mix of exclamations included Mayor Clem Seifert’s “Now wait a minute!” and Bernard Alston’s “What kind of numbers are we talking about?”
Williams will need 30 to 45 days to prepare final numbers. But he was clear on the project’s potential: “There’s no better savings than getting rid of this building completely. Those energy and operational savings dollars can actually be used for the upgrade of the new facility.”
Under the state-regulated energy conservation program being considered, Energy Systems would guarantee that Henderson would save enough money from the upgrades to pay the cost of making the improvements. The upgrades include cheaper-to-run windows and heating and air-conditioning systems.
In other words, Energy Systems guarantees in its Local Government Commission-approved contract that the city’s out-of-pocket utility bills will be cut each year by at least the amount that the city will pay to finance the construction over a set period, usually 12 years. If the annual cost for the principal and interest on the financing is $20,000, for example, the city will have to save at least $20,000 a year on its power bills, or Energy Systems will have to pay the difference.
Vance County Schools entered such a deal with the same contractor in the spring of 2003. The school system’s 12-year contract calls for spending $3.1 million and saving $4.6 million. Williams said Monday that the schools didn’t get the expected savings in the first year, so the contractor paid the difference and made construction corrections to avoid further shortfalls.
Last year’s energy-savings proposal for Henderson was to spend $428,519, financed over 12 years, to install more energy-efficient lighting and heating/ventilation/air-conditioning systems in the city’s buildings. At the time, Progress Energy Solutions’ Alyssa Walker said the city would save $34,210 in the first year, according to the minutes of the January 2004 meeting.
Because of the Municipal Building expenses, “there really wasn’t, I didn’t gather, a good sense of ‘Yeah, this is exactly what we want to do,’ ” Frazier said of last year’s stalled energy-savings proposal.
Seifert said more than half of the money, about $250,000, would have been spent on the Municipal Building to replace 35 air-conditioning units and make other improvements. That expense sparked the idea to close and sell that building and move all city offices to the Operations Center.
But that idea had the effect of halting the energy program, which included Municipal Building work. The city spent $4,000 to study the feasibility of the move, but architect Surapon Sujavanich’s plan for Operations Center renovations would have cost $450,000. The city had no money for such an undertaking, so the idea, like the energy-savings program, was put on hold.
“The problem you had with moving out of this building was the upfront cost,” Williams said. “With this program, there would be no upfront cost.” By state law, monitored by the LGC, any energy-savings contract between Henderson and Energy Systems must guarantee that the savings would pay for all costs.
“We do guarantee the savings will be there to make the payments,” he said.
The mayor and council appreciated the guarantee. But they were surprised to learn that the very concept they had considered a year ago — saving enough by shutting down the Municipal Building to pay for fixing up the Operations Center — could shift from prohibitively expensive to cost-free.
“I’m missing why it’s OK for you to front the money and us to pay you back, but it wasn’t OK for us to front the money and pay us back from decreased power bills,” Seifert said.
For one thing, the cost of the Operations Center renovations could be as little as $190,000, Frazier said. That’s less than last year’s proposed Municipal Building upgrades, yet it would save even more at the Municipal Building by closing it. In addition, the savings from the rest of the city would help cover the extra expenses at the Operations Center.
“We could finance the same thing with any other contractor and just say we’re going to take the savings from here, just like we talked about before,” Seifert said. The difference now is that through the arrangement with Energy Systems, the savings and payments are guaranteed, and the LGC has bigger role.
Mike Rainey, who has pressed for the city to make the move down Beckford Drive, made Monday’s motion to request a final proposal from Energy Systems; Lonnie Davis seconded the motion, which passed unanimously.