County, school system agree to energy partnership

Published 11:43 am Saturday, August 15, 2015

The Southampton County School Board at Monday evening’s meeting approved the signature of an Energy Performance Contract with ABM Building and Energy Services. This is for various lighting, mechanical and building automation upgrades in numerous buildings owned by the school system. The capital cost of the upgrades, pending final legal review by the school board’s counsel, is $7,157,138.

The board of supervisors will serve as a conduit for financing, according to county administrator Michael W. Johnson.

“[Superintendent] Dr. [Alvera J.] Parrish asked us to take the lead in financing the project, much like we’ve done with school bus purchases over the last three years,” Johnson said. “Accordingly, we developed a Request for Proposals for leasing services, and received two qualified proposals back: one from Banc of America Public Capital Corp. and the other from PNC Equipment Finance.

“[The supervisors] authorized me to sign the Master Lease Purchase Agreement with Banc of America Public Capital Corporation based on the terms including in our July agenda — 3.01 percent over 15,” he continued. “We’re scheduled to close on the financing on Aug. 26.”

On that date, the full project amount will be placed in an escrow account and used to make payments to ABM on a monthly basis as installation of the new equipment progress. The school will make its first lease payment on Jan. 15, 2017.

“The project has no net impact on the county budget,” Johnson said. “Next year, when preparing the Fiscal Year 2017 budget, the school board categorical funding for debt service will be increased by $639,522 to cover the first lease payment, but there’ll be a corresponding decrease in their categorical funding for operations and maintenance.”

The total sum of the lease payments over 15 years is $9,175,875, while the projected and guaranteed energy savings over that time period is slightly more than $9.3 million.

“If the savings don’t accrue, ABM is required to reimburse the county for any shortfalls,” Johnson said. “They are also required by statute to provide a 100 percent performance guarantee bond for faithful performance, and must provide an annual reconciliation of the guaranteed energy savings.”

In 2001, the Virginia General Assembly adopted the Energy and Operational Efficiency Performance-Based Contracting Act to encourage state offices and units of local government to invest in energy conservation measures such as added insulation and replacement windows, more efficient HVAC equipment and modernized energy control systems as a means of reducing energy consumption, producing cost savings and improving the indoor air quality in public facilities.

As a result, pubic agencies like the school board invite four or more pre-approved energy service companies to do preliminary audits of their energy use and then submit proposals on how much they could save with a number of recommended renovations. The school board began this process in 2014, and negotiations were then opened with the two aforementioned finalists to provide a comprehensive investment grade audits, which Johnson said contains hard numbers on how much the renovation will costs and how much energy savings will be realized.

The county requested a bank loan, or lease-purchase agreement, based on the investment grade audit provided by ABM, which will be used for the various upgrades at Southampton County Public Schools.