2017-07-12 / News

$3.5 million agreement approved for school energy savings project

by Kate Evans


This graph from CMTA mechanical engineer and project manager Casey Borst shows that the expected 34% reduction in Morgan County Schools operational and energy costs from the CMTA energy savings project will cover project expenses and the annual lease purchase agreement payments with additional savings returning to the school system. This graph from CMTA mechanical engineer and project manager Casey Borst shows that the expected 34% reduction in Morgan County Schools operational and energy costs from the CMTA energy savings project will cover project expenses and the annual lease purchase agreement payments with additional savings returning to the school system. The Morgan County School Board unanimously approved a $3.5 million 15- year equipment lease purchase agreement for their guaranteed energy savings project with CMTA Energy Solutions at their July 5 meeting.

The lease purchase agreement is through First Security Finance, Inc. of Little Rock, Arkansas, an affiliate of Cruz and Associates. The agreement was arranged by Edward McLiney of McLiney and Company with legal assistance from Bowles Rice finance attorneys Roger Hunter and Berkeley Bentley.

The energy savings upgrades include district-wide facility work that includes heating, ventilation and air conditioning (HVAC) rooftop unit replacements, HVAC system renovations, new HVAC control systems, replacement LED lighting and plumbing upgrades. The facility improvements are expected to reduce the school system’s energy and operational costs by 34%. The energy savings from the building upgrades will pay for the renovations.

Some $369,261 is projected in annual energy savings from the project through utility bills, operational and maintenance expense savings and rebates. CMTA guarantees the energy savings over the 15-year term. If the project doesn’t meet the projected savings, CMTA will reimburse Morgan County Schools the difference on an annual basis, CMTA mechanical engineer and project manager Casey Borst said previously.

Scope of work

The project’s scope of work include LED lighting replacements and select plumbing upgrades throughout the entire school district, new direct digital heating, ventilation and air conditioning (HVAC) control systems countywide, new middle school rooftop HVAC units with additional supplemental cooling and a high velocity fan for its gymnasium, two new HVAC units for the intermediate school gym and Widmyer Elementary HVAC system renovations.

Other work includes a new Widmyer hot water heater, a new intermediate school direct digital control system, board office HVAC systems renovations, a new air handling unit for the high school media center, additional middle school fire alarm upgrades and other miscellaneous minor HVAC work at all district schools.

Payments

The interest rate on the $3.5 million lease purchase agreement is 3.749%. The school board’s first payment is due on July 6, 2018 and will be around $124,000.

Their second year payment is expected to be about $256,000 and will gradually increase each year over the 15-year term to a final payment of an estimated $394,000. McLiney and Company official Edward McLiney said the payment schedule was arranged so as to have a positive cash flow every year from the CMTA energy savings.

BRIM funding

Of the total $3,525,756 project cost, $3,310,162 is funded by utility and operational savings generated by the project, Bell said earlier. The $215,594 difference is coming from the school system’s BRIM insurance claim for last summer’s hail damage to the Warm Springs Middle School and Warm Springs Intermediate School rooftop HVAC units. The insurance money will replace those units.

Benefits

Bell said the lease purchase agreement will give the school system much needed facility equipment upgrades and create a better learning environment with heating, lighting and cooling that will be more energy-efficient and environmentally-friendly.

Board members felt the lease purchase agreement was a great opportunity for the school system to get needed facility equipment updates done without cost to taxpayers because of the CMTA guaranteed energy savings contract. Board vicepresident Aaron Close said they appreciated the quickness with which the lease purchase was arranged so the work can begin as soon as possible.

Work timeline

Work on the middle school, intermediate school and high school media center HVAC replacements is scheduled to start this summer with the board office, lighting, controls and plumbing work occurring in the fall, lighting, controls and system commissioning next spring and the Widmyer Elementary HVAC renovations next summer.

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