A $9.2 million project between Energy Systems Group and Warren County School System is within days of knowing its fate, at least as far as funding that requires Warren County Commission approval.
“I’ve lived here all my entire life,” said Director of Schools Bobby Cox. “I’d like to continue to live here. If this goes south, I can’t live here. So, I’m going to have a problem if this goes south and I have to move somewhere else.”
The words, spoken mostly in jest, were made before members of the county’s Financial Management Committee on Monday. Cox has been pushing for the $9.2 million project that supporters say will pay for itself with energy savings.
However, some commissioners believe the claim is too good to be true and say this will end up like other projects with promises of energy savings that have never materialized.
The $9.2 million project by Energy Systems Group will include comprehensive LED lighting, district-wide controls, a Hickory Creek boiler, HVAC (heating, ventilation and air-conditioning) replacements for WCMS, Bobby Ray, Eastside, Irving College and West, an additional HVAC at WCMS, central office and Dibrell, WCHS coil replacement, and weatherization.
As claimed by Energy Systems Group, the savings should be enough to cover the project’s cost. If not, ESG will make up the difference.
Last week, Cox went before members of the county’s Education Committee with a 3.75 percent interest rate on a lease payment and stated he would continue to seek a lower rate. This week, he presented a net interest rate of 3.55 percent to members of the Financial Management Committee and a financial contribution by the School System toward the project.
With a $2 million Caney Fork loan with an interest rate of 1 percent and the $7.3 million bond with a net interest rate of 3.55, the $9.2 million project (interest included) will be $12.2 million.
“The School Board asked me how much we would save by not having to do these projects ourselves and upkeep on the older equipment that we would be changing out,” said Cox. “They wanted to put that money back toward the project. On a sliding scale beginning at year one with $195,000 and ending at year 14 with $75,000, the School Board chose to put a combined $1.73 million toward the project.”
Cox provided a projected summation of the project:
Project cost: $9.2 million
Energy savings: $9.8 million
Operations savings: $915,425
Customer installment: $1.73 million
Project positive cash flow: $12.48 million
Net project cash flow: $250,931
“At the end of 18 years, we’ve earned a little over $9 million in energy savings. The school system put in $1.7 million. The cash flow is $12 million. At the end of the day, we’ve spent $1.7 million. We’ve paid off a loan of $9.2 million and we are $250,331 in the black after it’s all said and done. That’s a quarter of a million in savings. We haven’t come to you for a tax increase. We’re shouldering the burden out of our capital project’s fund. If the estimate that ESG gave us falls short, they cover that shortfall.”
County financial advisor Scott Gibson reviewed the project and gave his endorsement.
Concern, again, reared its head.
“It sounds too good to be true, but it sounds pretty convincing,” said Commissioner Blaine Wilcher.
As he did last week, Cox emphasized ESG has never defaulted on a contract, has never been sued, and has never had to cover an energy/ cost shortfall in Tennessee.
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.