MINUTES OF MEETING OF
IRONTON CITY COUNCIL
August 24, 2020
6:00 p.m.
A Committee as a Whole Meeting of Ironton City Council was held on Monday, August 24, 2020 at 6:00 p.m. via video conference. Present was Vice Mayor, Craig Harvey, who presided and members: Cleary, Haney, Hock, Kline, Pierce, Rist – seven.
Mr. Harvey introduced Mr. Joe Sokol of ABM Electric, who gave a power point presentation regarding energy conservation and capital. He discussed the potential savings for the City through a performance study on equipment and efficiency study on our buildings. The money that the City saves is guaranteed to pay for the equipment that would need to be replaced. He said they can have a sufficient program per the legislation passed on their preliminary analysis, these are benchmark numbers, as well as comparisons that they have seen with like facilities and like operations based on the information they have. He said these would be annual savings numbers from a conservative standpoint as far as what the City of Ironton could realize through this type of program. He said when they total it all up, from energy to operational maintenance costs, you are looking at, from a benchmark standpoint, a little over $250,000 annually through this program. He said over a 20-year term, that would save roughly $5 million of funding that the City of Ironton would be able to utilize through this program, and that would be funding that could be used for needed capital improvements throughout City infrastructure, City buildings and Water and Waste Water plants.
Mr. Kline asked the Mayor if he could give them his input as far as moving forward with ABM. Mayor Cramblit said they are working on asset management in water and sewer and feasibility studies going on in those places. He said he sees ABM as allowing them to take it a step further with knowing what our costs are going to be for the next 20 years. He said they could also provide us the data of what we are going to expect to expense and the life expectancy just like our asset management plan on water and sewer will from RCAP. He said it is also allowing us to look at efficiencies as well. He said it is going to allow us to take what we are going to save over 20 years and be able to provide some relief in the short term for us to fund some capital improvements or get some general fund relief. He said right now it seems like a no-brainer to do this, but they will have to look and see what they can take on, based on John Elam’s conversations with Mike Burns. He said as of right now, he thinks as far as going to the next steps and looking into what the program will actually offer past the preliminary analysis, he thinks they should do that.
Mr. Pierce asked Mr. Sokol if it would be possible for him to give to Council and the Mayor two or three references of towns about our size that have used your services? Mr. Sokol said yes, he could do that, and he will send it to Mayor Cramblit. Mr. Elam asked if there was any way Mr. Sokol could distribute this power point to them? Mr. Sokol said yes, and he will send it in an email to Mr. Elam and Mayor Cramblit, and he can distribute it to Council as he sees fit. Mr. Cleary said if they would come in and say this Waste Water plant needs to have this equipment
replaced in order to be more efficient, and it would cost for example $100,000, all of their enterprise funds are fed by the utility bills that the citizens pay. So if they need to change something, does that mean that they have to pass that cost on to the citizens in the form of rate increases in order to buy what they need to save money on what they are doing now? Mr. Sokol said they are not asking for a rate increase to pay for those improvements. He said what they are looking at is the current expenses that are being internally expended at the Water Treatment plant or Waste Water Treatment plant in the form of maintenance and repairs, energy bills (gas and electric), and if they can put more efficient equipment into the Water and Waste Water plants and save, for example, $10,000 annually, then that $100,000 piece of equipment would be able to be paid for. So what they are doing is lowering the cost of operating so that that difference can pay for the capital improvement. Mr. Cleary asked how do they get that $100,000 to buy that piece of equipment in the first place? He understands that they will have substantial savings over the next year, or 5 years, that will pay for it, but somebody has to write a check to buy that piece of equipment. And if they don’t have money in the account, how does that work? Mr. Sokol said there would two different options for this situation, which would be a tax exempt municipal lease; so they would borrow for it, and then that annual payment for that debt would be covered by the annual savings. He said also, there is another option that ABM offers specifically, where they would actually pay the $100,000, and then out of the savings the City would pay ABM back over time.
Mr. Kline asked Mr. Sokol if he had a list of bond companies or lendors who he has worked with that are accustomed to this type of financing? Mr. Sokol said yes, and he will send some information along directly to him.
Mr. Haney said the thing that stands out to him is how ABM is invested. He said they basically don’t make anything off of it unless we are generating revenue from it. He asked if Mr. Sokol if he could give a little more in-depth analysis of that for everyone, because that was one of the things that really stood out to him the other day. He said he has similar questions to what Bob had regarding how our savings turn into payments, and things like that. Mr. Sokol said he could do that, and asked that Mr. Haney let him know if that answers his question. Mr. Sokol said a particular example would be if ABM would invest in the City of Ironton with a $100,000 improvement, for example, in the Waste Water Treatment plant. He said ABM would pay that $100,000 for the City to realize that improvement, and within their analysis, they would see that on an annual basis that improvement is going to save the City $10,000 annually. He said the City wouldn’t pay anything until after that piece of equipment is installed and after ABM comes back and measures and verifies that that $10,000 in savings was actually achieved. So they do the measurement and verification every year, and there is actually a report that will come back and they review with Administration to show what that annual savings has been. So what the City is looking at is ABM not being able to get paid until they have proven that the City has seen their savings and it has been measured and verified. He said if they didn’t do it, then ABM wouldn’t get paid. Scott Mason of ABM said for everything they look at when they are talking about the ala carte menu, they are going to engineer and be able to tell the City what every single piece of equipment is in your building and how much it costs to operate that equipment. He said they are essentially building an energy model for every single space, and so when they take a piece of equipment and put a new, more efficient piece of equipment in, that is part of the engineering, in addition to measuring and verifying after the fact, before the City would ever
select a project, they can go down into the finite detail of every single piece of equipment and explain what the energy calculations were on that piece of equipment, and why it uses the energy it does. Mr. Haney said when he first met Joe, he has some notes, and they gave a conservative number as to savings, basically to protect both parties; and also, the end of the year reports that they present, can they give a little bit more information on that? Mr. Sokol said as far as the conservative approach to the energy side, he said typically when they measure and verify, they get down to the dollars and what those savings are. So whatever they think those savings are going to be, they will usually have a little bit of a buffer as far as the guarantee is concerned. He said if they think the City is going to save $100,000, they will guarantee that the City will save $95,000. He said typically when they go back year after year, they are coming back and reporting that there’s $8,000 or $17,000 in extra savings, and that is all kept by the City. So typically, whatever they are guaranteeing, the City will see a little bit more in savings, and that is just from the conservative standpoint to Councilman Haney’s point there. He said they are looking to protect themselves a little bit, but also protecting the City. He said Mr. Haney’s second question was about the annual reports on the measurement and verification. He said in addition to their annual measurement and verification, they will do a post install report. He said the post install report will have pictures of the old pieces of equipment and pictures of the new pieces of equipment, what was installed, what the energy usage is of that newly installed piece of equipment, and the post install is to see exactly what the savings really should be expected to be seen in that first year; and the reason for that is once everything is in, we want to get an idea of if they are on target or are we not going to achieve the savings and do we need to adjust something. He said every year after that, they come back and do the same measurement and verification they got before, and there are pictures and graphs of the energy savings. Mr. Pierce said going back to what Bob and Chris had commented about, let’s say that they get a $100,000 pump installed, we (inaudible) financing for it. Your recommendation says, use this pump, and when you’re replacing it, it will be great savings, and so they do. After a year, they find that that pump indeed saved them $10,000. Out of that $10,000, what does the City owe you? Mr. Sokol said they don’t take anything from the savings. All the savings are the City’s. He said if you view ABM as a general contractor, within these programs, because they are guaranteeing the savings and costs, they own everything and if something goes wrong, it is on ABM. But they would be completing the work on installing that pump. Mr. Pierce said, so their financial gain is based on the contracting work of installing new equipment. Mr. Sokol said that is correct.
Mr. Cleary said it sounds like a good deal, and he thinks Mr. Sokol has answered all of his questions. He said he appreciated Mr. Sokol and Mr. Mason coming down to tell us about it. He said his main thing is that he just doesn’t want to get into any kind of situation where they have to increase fees to pay for it because it’s not performing the way they think it will. But from what he has heard this evening, he is on board with it. Mr. Haney said he is on board, too. Mr. Mason said he wanted to comment on Bob’s statement. He said ultimately, that is how you transfer that risk of not having to increase rates to the taxpayers. He said that is why people turn to programs such as this—they find ways to fund measures within their own budget without having to raise rates or raise taxes. Mr. Kline said he and the Mayor had ask Mr. Sokol to forward them some sample legislation for the letter of intent and the proceed with contract, and he asked the Mayor if he received a copy of that. Mayor Cramblit said he doesn’t remember seeing it. Mr. Sokol said he thinks he sent that to Councilman Kline. Nate said he will go ahead and forward it back to the Mayor. He said if the Mayor is ready to act on it, could he forward
both of those documents to Brigham or Mack to review, and see if they have any issues with it. He said if they don’t, whenever he is ready, he will go ahead and sponsor that. Nate asked the Mayor if he could ask Brigham to send a template draft out to all Councilmembers and ask possibly if there are any additional sponsors once he gets that drafted. Mr. Harvey said he thinks it would be easier to ask if anybody doesn’t want to sponsor it, because it sounds like everybody is on board with it.
Ms. Rist moved, seconded by Mr. Haney, to adjourn. Motion passed unanimously.
Minutes taken by Council Clerk, Marta Leach.