In October 2019, Monroe County Commissioners were approached by a vendor who performed an energy audit on a number of county buildings and projected a cost of $5.8 million for the energy savings plan implementation, which included updating electrical, plumbing, phone system (VOIP), security, and HVAC (Heating & Air Systems). The $5.8 million plan would be financed over a 20-year period for 3.5% interest. All of the upgrades would be done in 18 months. After this vendor revealed the county’s anticipated cost in December 2019, District 2 Commissioner Eddie Rowland sought out some local contractors to figure out a less expensive way. Commissioner Rowland said of the move: “We’ve been reactive in this county enough. I’m tired of it. Let’s get proactive, and let’s fix these things when and how it makes sense for us to do it rather than wait until it tears up.”
After several months of study, Commissioners unveiled last month a plan that will enable the county to catch up on 10 years of deferred maintenance and allow the county to get through the next five years with county facilities updated and maintained.
The plan includes ways to efficiently phase-in new equipment to 43 county buildings to include approx. 250,000 square foot. These improvements include: new LED lighting, scheduled HVAC replacements, new jail locks, building envelope repairs, plumbing updates, roof replacements, a new jail camera system and a new Voice over IP telephone system.
In order to put the plan into effect, Commissioners will borrow $2.5 million, which is less than half of the amount estimated by the vendor, to do the work, at an interest rate of 2.1% over a period of 5 years.
Commissioners, over the 5 years, will strategically and efficiently replace 55 of 79 HVAC units at a cost of $424,900. They will also install LED lighting in 24 of 43 county buildings at a cost of $440,338. In addition, the county will replace roofs on five county buildings (Senior Center, C.A.R.E. Cottage, Head Start, Health Department and Hubbard Dormitory) at a cost of $110,000 and install 108 new security cameras in the jail at a cost of $200,000. Other expenses include: $200,000 for VoIP service, $200,000 for jail locks, $125,000 for repairs to building envelopes, $250,000 for public updates and $100,000 for contingency costs. At the end of the 5 years, all the systems will be updated and on a scheduled maintenance plan, the loan will be paid back and the energy savings created by these updates will be evident on our utility bills. In addition, the perpetual plan to maintain these items without borrowing any more money will be in place.
Commissioner Rowland estimated a projected net savings of up to $246,546 during the first year of implementation. As for how Commissioner Rowland figured up that savings amount, the District 2 Commissioner calculated that the county presently spends $171,000 annually on phone service and anticipated that cost would drop to $91,000 annually with the new VoIP service as projected by ABM. Commissioner Rowland then noted the county spends $447,481 each year in Electrical and Gas Utilites and projected an annual decrease to $380,359 when a 15 percent utility bill reduction is factored in. He estimated that LED lighting would enable the county to reduce its light costs from $135,000 annually to $50,000 annually. Also, he projected that building envelope improvements would reduce the county’s annual costs from $447,481 to $434,057.
The county will begin its maintenance plan by spending $210,200 on improvements at the Monroe County Conference Center. Of that $210,200, more than half, $111,200 will be spent on HVAC services. The remainder will be used for VoIP ($16,000), LED lighting ($45,000), the building envelope ($10,000), plumbing ($8,000) and any unexpected additional costs ($20,000).
“The previous commissioners bought these buildings, and you have a responsibility to keep up with your property,” Commissioner Rowland said, “And we have deferred maintenance. We’ve not done maintenance that needed to be done.”
District 3 Commissioner John Ambrose and District 4 Commissioner George Emami each praised Commissioner Rowland, who owns a heating and air company, for the detailed work he’d put into devising an energy savings plan that should ultimately save the county money.
Commissioner Emami said, “We got lucky and had somebody who knows a lot about air conditioning… Basically Commissioner Rowland took about $6 million worth of cost to you, the taxpayers, and took all the most important stuff out of that and boiled it down to $2.5 million and basically treated it like it was his money.”
On Tuesday, March 17, commissioners approved by a 4-1 vote a lease purchase agreement through the Association of County Commissioners of Georgia (ACCG) to finance the project at a 2.12 percent interest rate through Truist Bank. Commissioners said acceptance of the $2.5 million loan will not cause property taxes to increase in 2020.
Feel free to call Commissioner Rowland with any questions- we have included below a few question and answers that may help.
Questions & Answers:
1. How are you able to do a $5.8 million job (proposed by the vendor) for $2.5 million, you must be cutting corners?
Professional people, Power generation, and Profit.
2. I get the profit part but what about professional people and power generation- please explain?
Let’s start with professional people- The vendor’s proposed plan does work in very small, rural counties where there are a lack of professional people, for example, HVAC contractors, plumbers and electricians. Monroe County is blessed to have good contractors and we are close to Macon/Atlanta, which opens even more doors for professional contractors. In addition, most small, rural counties have personnel that have limited knowledge and abilities. In our county, we have purposefully hired individuals of professional quality that have the expertise to analyze and calculate the most thoughtful and efficient methods to complete their tasks.
Power Generation- The vendor’s option of solar energy (solar panels at the Jail and Justice Center) was NOT included in our plan. The reason was that the cost of the batteries were not included in the original plan. And the solar panel location that was proposed was on land that did not belong to the county. We chose to be much more efficient with the energy currently provided rather than create an alternative energy source.
3. Has the county really deferred maintenance for 10 years?
Yes, but that is only part of the information. Let me explain. In or around 2008, the nation experienced a financial crisis. Property became less valuable, and some people simply chose foreclosure because they could not pay their bills. Our county reacted by only funding the bare necessities and deferring proactive and preventive measures until later.
4. How does borrowing this money benefit me as a taxpayer?
As commissioners, we perceive our jobs as your business managers and you are our stockholder. We owe you an explanation as to why we think you should spend $150,000 in bank fees and interest to do this project.
Let’s start first by showing you the cost of the loan:
$2.5 Million at 2.1% interest for 5 years is $136,000 (rounded up) plus approx. $14,000 bank fees (possibility) = $150,000.
Lets go back to our costs/savings:
VOIP: The county currently spends $171,000 on phone service. Now, we are not IT specialists, but the vendor was and the county also has its own IT specialist and he concurred that we would save approximately $80K by converting to VoIP service, which means that we would be spending approximately $91,000 annually for phone service. Let’s just be safe here and say they are only 80% correct, in that case our annual savings goes from $80k to $64K multiplied by 5 years- the total savings is $320,000. You pay $150,000 interest to do this now vs. over a period of years and years and you reap the savings now and at the end of 5 years you have spent $150,000 in interest to make $320,000 in savings. That’s smart business!
Lighting: LED lighting change over would reduce costs from $135,000 annually to $50,000 annually. An $85,000 annual savings (thecalculatorsite.com for LED savings calculations). It’s a 4 year payback by the way.
HVAC/Building envelope: County currently spends $447,481 each year in Electrical and Gas Utilities and estimated the projected annual decrease to $380,359 when you factor in a 15% decrease in Utility bill reduction. So why pay this interest now when we could pay a little along the way to replace these units? The key to this strategy is timeliness and volume (this is not a calculation but a common sense answer). Commissioner Rowland is an HVAC contractor and understands the business. The most costly air conditioner replacement you will ever spend is when you only have one unit to replace, it goes out at the most inconvenient time (weekends/holidays), and you don’t have the money in your hand to pay for it.
Conversely, the least costly air conditioner replacement you will ever spend will be when you have multiple units you need to replace at the same location, done at a pre-scheduled time convenient to the contractor and supplier, you have the money in hand and the time to properly bid it out. If you don’t believe it, ask your heating and air guy. This also applies to plumbing and electrical.
So you basically have to spend the money in 5 years anyway because it all needs to be done. Your addition of $150,000 in interest for 5 years gives you back:
$400K VoIP
$425K Lights
And the common sense savings from contractual services.
As stockholders, which Commissioners are, this is some pretty good stuff.
Roofs/Security/Cameras/Jail Locks- Must be done immediately.
5. What happens after 5 years?
1% of the value of all county buildings is budgeted annually in a nest egg to maintain what we have completed. This should maintain our buildings in perpetuity and eliminate the need for any more loans. Current value is approximately $37.5 million in real property so current nest egg to budget is $375K annually.
6. Tax increase??
NO! Half comes from a bond payment that matures this spring and the rest from energy savings. No tax increase.
