Butler County Commissioners were able to discuss the decision of a possible contract

With the completion of the energy audit from Schneider Electric behind them, the Butler County Commissioners were finally able to completely review the suggested projects and discuss the decision of a possible contract.
“They have completed the audit that was approved by the commission and they have put together a summary to move forward that would provide some significant cost savings at the detention facility,” began County Administrator Will Johnson. “The project will show significant cost savings and would involve the conversion of the electric dryers into gas dryers, the conversion of kitchen equipment, an extension of gas into the facility, equipment automation control upgrades, lighting upgrades and condition changes. The cost for the projects will be $651,320 and the paybacks will range from 3.7 years to 14.9 years on the different equipment.”
The staff involved in the projects felt it necessary to propose two additional projects as well.
“The jail staff and facilities management staff wanted to look at two additional projects,” explained Johnson. “Those projects would be the replacement of the washing machines and the access panels in the cell blocks. The access panels have been an ongoing problem with the inability to get inside and remove the paper products the prisoners have been shoving in the receiving holes. We looked at adding those additional projects and they were going to cost $109,000.”
The financing for the project would still have several options on the table.
“The recommendation is to finance the projects over a 10-15 year period,” he went on. “I would like to look at shortening it up to a 10-year bond if we can. We’ve looked at the preliminary cost. If the commission decides to go forward, we will look at bond pricing.”
“If I’m understanding this correctly, are the savings we’re going to see guaranteed?” asked Commissioner Dan Woydziak.
“The savings are guaranteed,” said Johnson. “If the savings are not seen by us annually, Schneider electric is required to cut us a check.”
The commissioners seemed concerned with the cost of the project.
“What is the total cost we’re going to be charged for this project?” asked Commissioner Peggy Palmer.
“$754,289 will be the total cost of the project,” said Johnson.”Typically in a project, you’re going to see 8-12 percent in engineering fees and 10-15 percent in contractor fees.”
“So $225,000 will be paid to Schneider Electric for doing the project,” said Palmer
“What we don’t see is the costs that are incurred on the financing side,” commented Commissioner Ed Myers. “I’m just wondering do we have an estimate as of today as to what our financing costs are going to be?”
“On a 15-year project at 3.25 percent, the net interest on $632,000 is almost $200,000,” said Johnson. “That’s why I would like to look at a 10-year bond. We could cut down that quite a bit.”
“So we’re talking about a 40 percent cost of the financing on top of the project,” said Myers.
Myers began to ask how much the county was really going to be saving with the projects.
“Do we know what the current practice at the detention facility is for some of these points?” he asked. “Comments were made in previous presentations that our current building control system is maybe not adequate and would need to be enhanced. Assuming the new system is accurate and can control the different areas of the facility, it seemed as though the calculations in the contract here were based on this 74-70 degree temperature criteria. Under standards of comfort, almost every area heat wise has the temperature set between 68 and 70 degrees and between 70 and 74 for the cooling side. I’m curious as far as the lack of deficiencies on the current building.
“We’ve had inmates put their toilet paper inside their vents and we’re told that is because they’re too cold. Which maybe means those cells were being cooled down to the 71-72 range. In the savings you’ve calculated for the building, I’m wondering whether part of the savings really is just something that is not really some form of deficiency but instead a result of the thermostat change.”
“To begin to calculate that, we look at your base line utility spent in an annual year,” said Drew Sebelius, a representative with Schneider Electric. “We take out any kind of weather extremes. We then use that information to create a computerized model of your facility. We computerize an automation system for that model and in our computer system, we mimic how your building is operating. That allows us to see places where improvement is needed and it allows us to make changes to the system before they’re really implemented. That allows us to directly calculate the savings for your facility.”
Palmer wanted to completely review all the projects proposed in the contract.
“I want to review the projects to see if I’m clear,” she said. “It appears there would be six projects: convert the dryer to gas, convert kitchen equipment, replace clothes washing machines, change access panels and smoke detectors, building automation, lighting and controls and general conditions. How much will we really be spending on these projects? Right now, it looks like a half a million dollars in projects and a half a million dollars to pay someone else to do them.”
“Over the course of 15 years, you’re looking at $950,000,” said Johnson. “I’d like to take $100,000 of that out of the reserves and finance the rest of the project. We could use more cash to pay for the renovations, but it would drain down the reserves, which in this case  would be a bad idea.”
Myers was not convinced.
“In a general sense, we’ve talked about the energy challenges at the detention facility,” said Myers. “I think it’s been  a valuable exercise to have some pros come in and look at the comprehensive thing. Qualitatively, everything that Schneider has brought to our attention were things that were kind of on our radar system already. There weren’t any new and exciting surprises. What we have gained here is that Schneider has been able to sharpen our quantitative focus as far as  what pays back quicker and what parts of this project we are getting the most bang for our buck.
“I’m not convinced at this point that a fully turn-key approach from an administered program such as Schneider Electric, Inc., is presenting us with is the most efficient use of our county dollars. I think that we’re safe to say that I see no reason to doubt the general numbers in terms of energy savings. This is a pretty well understood energy balance. On a project of this scope, I’m wondering whether it behooves us to have the benefit of the investment grade audit whether the county would be better served by going ahead and implementing the main features of this program over a three to four year period instead of financing the bulk of it.”
“Every year you put this off, you can lose the project savings of $50,000 a year,” explained Johnson. “As we all know, as times goes on, nothing has ever gotten cheaper. You’re going to spend the same on an individual project as you are with this one. You’re going to have to bring in an architect and engineer to design a plan to allow gas into the facility.”
“Aren’t those costs already included though?” asked Commissioner Jeff Masterson.
“If you don’t do this project and you want to phase it in over three to four years, you’re going to spend a lot of that up front,” said Johnson. “You’re going to spend the same amount of money with someone else. In order to take advantage of the costs savings, you’re going to spend $200,000 to $250,000 for all the design work up front in order to replace these components.”
“With the gas dryers, there is a combustion changer as well as heating elements,” said Sebelius. “It’s physical duct work. There’s a little bit of piping involved in the dryer conversion and kitchen conversion. You’re going to ask them to design a project where one of you have not only gas coming into the building where all the penetrations for all the equipment are going to be. You’re going to do the same design of a project lined out here.”
Masterson was not completely convinced either.
“The kitchen equipment has a 15-year payback,” he began. “I appreciate the scope and I’m glad we did the audit. I’m in favor of cherry picking the projects that are most beneficial. I do think converting the clothes dryers is a good project. I can’t think you’re going to spend $300,000 to convert dryers to gas.”
“You don’t want to do design work for each project individually,” said Johnson. “You’d have it all done up front. Every time you’re going to spend additional money for everything. This is a budget neutral project and if that savings is not met, it’s guaranteed by Schneider. In my professional opinion, it’s going to be either budget neutral or better. It’s not like in three years, you’re going to find these same prices.”
Public Works Director Darryl Lutz weighed in on the project as well.
“This is a turn key project,” he began. “The facility was designed as an all-electric facility. Part of the costs we’re dealing with here is the infrastructure. I think the important thing is this does need to have a comprehensive approach. It needs to be done by people who analyze and specialize in this. You want to make sure that equipment is placed at the right width so we don’t have to redo the gas pipe line in order to place new upgraded equipment in other parts of the facility. You’re going to need to hire professional engineers on the gas lines and architects to design the systems. Part of the costs are going to be putting the infrastructure into place that should have been put in this building 10-12 years ago.”
“This is the project that gets me excited the most,” said Dan Engles, a representative of the Butler County Detention Facility. “You’re going to see bang for your buck and it’s going to be budget neutral. This is the best thing you could possible do and I’m confident they’ll do a good job–especially with their track record in the county.”
“I’ve seen the results of their project in the hospital,” said Commission Chair Mike Wheeler. “I believe they’re probably $60,000 to $70,000 ahead of their guaranteed energy savings every year. I’ve seen them in action and I’ve seen it work. Of course, the hospital is thrilled with their results.”
“I can’t support the comprehensive project without some solid numbers of putting a gas line in,” said Masterson.
“I’m supportive of the project,” said Woydziak. “The numbers are conservative and I’ve checked with the Rose Hill School system and they’re extremely pleased. They’re even seeing bigger savings than was projected.”
“To me, as important as the project itself is, is how we’re going to choose to pay for it,” said Myers. “I can’t really separate these two and that makes me reluctant at this time to fully endorse what’s before us. Although it is budget neutral, I would like for it to be better if possible.”
“I don’t know what our facility needs will be 10-12 years from now,” said Masterson. “And if we sign this contract, then we’re on the hook for a million dollars. In my opinion, I think we can do better.”
The item was then tabled until June 24 so secure numbers involving the price of the gas pipeline and financing options could be further explored.