County schools seek $3M partnership with Trane

By Marian Galbraith, staff writer

The Coffee County Commission approved a motion last Tuesday to move to the “next step” toward a performance contract that could ultimately require the county to borrow as much as $3 million for various energy-related upgrades to the schools.

The move was in response to a 1.5-hour presentation by Coffee County Schools director Dr. Ladonna McFall and representatives from Trane, a national manufacturer of heating and air conditioning systems.

The project had already been approved by the Coffee County School Board, according to McFall , and now needs approval by the commission.

This was also Trane’s second attempt to come before the full county commission to discuss the matter, but the first had been thwarted and postponed by a long meeting on other matters.

If the contract is ultimately reached, Trane promises a financial “guarantee” that the county will save at least $204,000 per year in utility bills, which should be more than enough to pay for the cost of the upgrades and financing, according to officials. Otherwise, the company promises to write the county a check for the difference.

If on the other hand, the county saves more than $204,000 in energy costs, the county could keep the difference, officials say.

Despite skepticism and confusion on the part of several of the commissioners, company spokesmen assured them that the “next step” being discussed would not create any financial obligation on the county’s part.

“In order to maintain and upgrade our facilities,” McFall said, “it takes money, and we know the county doesn’t have it.”

She went on to explain that performance contracts like the one offered by Trane provide a mechanism for county governments and school systems to pay for much-needed improvements out of the resulting energy savings and reduced utility budgets.

“We have AC units from 1982 in some of our schools, and we’re special ordering the parts,” she said, “so we’re really just throwing that money out the window.

“This (contract with Trane) would be a way to keep and reinvest that money into newer and more efficient equipment that will last us well into the future.”

The types of upgrades provided under the contract are said to include not only new heating and air systems, but also energy-efficient lighting and electrical upgrades, roofing, insulation and weatherproofing measures, low-flow toilets, and several other types of improvements through Trane’s business partners from various trades.

“We guarantee that these upgrades won’t cost the county a penny, because the energy savings will more than pay for the cost of your annual debt payments,” said company representative Randy Mauldin, “and if not, we will write you a check, as we’ve done with several other counties in Tennessee, until they do.”

Several commissioners expressed concern that a contract of this magnitude should be handled by competitive bid instead of simply being handed to the first company to offer it.

The News contacted county attorney Robert Huskey and other county officials with this question, but no one seemed to know for sure at the time of this writing.

Finance director Marianna Edinger said it would have to be done by competitive bid on “our side of the house,” meaning, if this were a county government contract as opposed to a schools project.

County mayor David Pennington later said it may turn out that it will have to be done by competitive bid before the process is over.

Mauldin went on to explain that Trane is one of only a handful of companies certified by the state to enter into such performance contracts, and that it has completed similar projects for several other county school systems including Clayton, Knox, Cheatham and Jefferson county, where McFall is from.

“We actually had to write checks to Knox County for the first two years, because we did not complete the construction and installation when we said we would,” Mauldin said, “but by year three, they were saving more than we promised, and were able to pocket the difference, and they’ve been doing so ever since.”

Mauldin added that the figures provided to the county so far were estimates, and that the next step would be to perform a more detailed audit to determine the actual cost of upgrades needed.

“The final amount may be $3 million, it may be $4 million, or it may turn out to be only $2 million, we don’t know yet,” he said, “so that’s why we need to get your approval for this next step.”

Commissioner Janet Fann asked what would happen if the company completed the energy audit, but the county later decided not to move forward with the financing.

“What will your study cost if we don’t go forward with the rest of the contract?” Fann asked.

Mauldin replied that there would be no charge for the next step, but commissioner Robin Hines still seemed unsatisfied with his answer later in the meeting.

“Commissioner Fann asked you a question earlier but I don’t think you really answered it,” Hines said, “and that is, what is a ballpark figure for what would the study would cost if we decide not to move forward from there?”

Mauldin responded that the “next step” being requested would be no cost to the county either way, but that it would be later verified by a team of engineers, which would incur a cost for the company that would be included in the total cost of the revenue-neutral upgrades.

“We won’t go to that step though, until we’re absolutely sure we can offer you a no-cost proposal,” Mauldin said.

Still, Commissioner Rush Bricken added that most companies who perform energy audits, according to his own research, charge by the square foot of the building or buildings being audited, such as five or ten cents per square foot, and that Trane should have some idea of what that cost would be.

Mauldin representatives said that the range for their engineering studies, which would come later in the game and be included in the total cost of the contract, is generally between 18 and 25 cents per square foot.

However, no one present knew off-hand how much square footage would be included.

Commissioners Bricken , Virgil Alford, Mark Kelly and others continued with questions about how the process would flow.

“If we truly capture these savings, then we would expect the schools to requests $204,000 less from the county,” Bricken said. “If you think that’s going to happen…”

After a few laughs from the audience, parliamentarian and deputy schools director, Joe Pedigo chimed in that yes, the money would come out of the schools’ budget to make the future bond payments.

After receiving multiple assurances that the proposal was verifiable and legitimate with no financial obligation on the county’s part for this preliminary audit of the schools’ facilities, was won by a narrow margin of 12 “yes” votes, eight “no’s” and one “abstain.”


Posted on Friday, September 13, 2013 at 12:47 pm