1/13/16 Program may loan funds for upgrades directly to school system

Program may loan funds for upgrades directly to school system
By Isaac Groves, The Times-News 1/13/16    
Reprinted with permission.      

   The Alamance-Burlington School System could replace lighting, insulation, roofs and heating systems in its schools without going to the county for capital funds through a program called performance contracting.

   “It’s the only program that I’m aware of that allows the board of education to borrow funds,” Tim Gasper of Brady Energy Services said at the Alamance-Burlington Board of Education’s January work session this week.

   State legislation would allow ABSS to borrow money directly for upgrades and pay that debt through energy savings. Brady or another approved energy services company would guarantee the amount the district would save.

   “The program is a guaranteed program, guaranteed to save enough to cover all of the program’s expenses, and the guarantee is reconciled annually so if we say we’ll save you a million and we save you $500,000, you get a check from us that year for $500,000, and that guarantee stays in place for the entire term of the financing,” Gasper said.

   After looking at the district’s facilities, Brady estimates ABSS spends about $3.2 million on utilities annually for more than 3.2 million square feet of space in 38 buildings, and has a long list of needed upgrades.

   For example, more than 80 percent of the district’s lighting is “T12” fluorescent tubes, which Gasper called obsolete, providing poor light and consuming a lot of electricity, compared to “T8” fluorescent tubes, which would bring about a 40 percent savings, or LEDs, which provide a 70 percent savings.

   Lighting replacement is the fastest and sometimes largest savings, Gasper said.

   According to Brady, with $5 million to $10 million in upgrades, ABSS could save as much as $475,000 to $800,000 per year. Over 15 years, that would mean $7 million to $12 million. The district would pay 2.6 percent interest over 16 years including the construction year at current rates.

   As an energy services company, Brady’s role is to analyze the district’s needs and propose what upgrades ABSS should make, do the construction work — which is where it makes its money — and guarantee the projected savings. The district borrows the money to pay for those repairs, and it repays the loan.

   The N.C. Department of Environmental Quality guides the process, and the N.C. Local Government Commission, which approves bonds, would have to approve the performance contract.

   Brady has had contracts with organizations including Durham Public Schools, Hoke County Schools and UNC Greensboro.

   “We see a 20 to 40 percent reduction. Our best to date is 60 (percent), and that’s at the North Carolina Museum of Art,” Gasper said.

   There will be a lot of questions to answer. Board member Patsy Simpson said she had concerns about the district borrowing money directly, and was left with suspicions about energy saving services after a so-called shared-savings contract with a company called Cenergistic.

   The district paid Cenergistic more than $1.2 million from 2012 to 2015 and paid an energy specialist — a position required by the contract with Cenergistic — $55,388 per year.

   The company said it saved ABSS more than $4.7 million — a figure Simpson has said she did not find convincing.

   Board Chair Steve Van Pelt said board members should come up with questions for Brady before the board’s next meeting. Simpson asked to meet with ABSS administrators in the facilities department to talk about the details.

   Board member Pam Thompson said she would like the board to have a meeting dedicated to the proposal.