Funding for Warren County School System’s $9.2 million energy savings project will be under consideration by the Warren County Commission on Dec. 17.
Director of Schools Bobby Cox is looking for the best interest rate for the project, which is estimated to be $9.2 million.
“We are trying to find something around the 3.5 range as far as interest rate,” Cox said. “What we have currently is 3.75. We even looked at cutting a couple years off that loan, but it would dictate that we put more money in up front. We have the flexibility to where we can pay it off early and not put the money up front.”
The scope of work to be performed during a project with Energy Systems Group: comprehensive LED lighting, district-wide controls, Hickory Creek boiler and HVAC (heating, ventilation and air-conditioning) replacements for WCMS, Bobby Ray, Eastside, Irving College and West, additional HVAC at WCMS, central office and Dibrell, WCHS coil replacement and weatherization.
As claimed by ESG, the energy saving project should save enough to cover the costs.
Cox said a 3.75 percent interest rate should cover the cost and net the school system $196,000 over the next 18 years.
“Long story short, where we stand right now, I think the current cash flow that you have at the 3.75 interest rate on the lease purchase agreement is probably the best route to go right now, unless we get something that shows we can get a lower interest rate. Then, couple that with a loan from Caney Fork Electric, which is zero percent interest and 1 percent finance. The project pays for itself. In 18 years, it is scheduled to net $196,000 in the black. Hopefully, we will have more than that.”
While Warren County government must acquire the funding, it will act as a pass thru for payments made by the School System using the energy savings. ESG guarantees to cover of the difference, if savings aren’t enough to cover cost.
“ESG has been in business since 1999,” said Cox. “They’ve done more than 40 projects. They’ve never written a check for falling short on any project in Tennessee.”
The School System’s current energy cost is $1.6 million a year.
Warren County financial advisor Scott Gibson, who made a presentation to the County Commission last month and warned commissioners to “stop digging” a financial hole, reviewed the project and gave his endorsement.
“Scott Gibson sent us an email,” said Cox, who then read it. “I’ve reviewed the ESG plan and I find it appears to be a good plan and the savings can pay all the 2 percent growth factor or almost all the project with a zero percent growth factor. I believe there is a very strong case for the county moving forward with this project.”
The information was presented to members of the county’s Education Committee. Chair Carlene Brown expressed approval for Gibson’s endorsement.
“We would have really needed to look at this project if he had come up and said, ‘This is a no-way project,’” said Brown. “That didn’t happen. His recommendation means a lot.”
Commissioner Robert Hennessee said, “I’ve gotten nothing but positive feedback from the people I’ve spoken to.”
Commissioner Daniel Owens relayed concerns expressed to him about the project falling through.
“There is always a chance that it could fall through, but they’ve done 40 other projects and are getting ready to do four more,” said Cox. “There’s always that chance.”
County Executive Jimmy Haley said the county would normally have to fund the work using property tax dollars and not energy savings.
“How many property tax dollars would it take to fix and repair if we had a major breakdown in any of those areas, if another chiller fails at the high school or Hickory Creek or at one of the other schools? What if we had multiple breakdowns? Some of these systems are old. If they all fail at once, how are we going to pay to fix them?” asked Haley.
Brown added, “It sounds like the huge risk is not doing it. With all the success and they say if this doesn’t work, they are going to pay for it. It’s in the contract. Both attorneys have read through it. It’s hard to say not to do it.”
If the majority of commissioners sign off on the project Dec. 17, work has a 12-month completion estimate. The monthly meeting begins at 6:30 p.m. in the courtroom of Warren County Administrative Offices on Locust Street.