Board approves $5.9M in energy upgrades
MT. PLEASANT—The North Sanpete School Board voted at its Feb. 21 meeting to approve the “Siemens proposal,” setting in motion the final steps for financing energy upgrades for all schools in the district.
Eric Thatcher, senior sales executive in the Salt Lake City office of Siemens, a national company specializing in energy-efficient technologies, told the board he had good news.
Rocky Mountain Power had approved a $576,000 donation, which covered the 10 percent of the total $5.9 million project cost.
The 10 percent third-party donation was required for the district to qualify for a Qualified Zone Academy Bond (QZAB) loan. QZAB is a program in the U.S. Department of Education that helps lower-income school districts with capital needs. Loans under the program are at zero percent interest.
Meanwhile, the district is still pursuing a Qualified Energy Conservation Bond under a federal program where administration has been delegated to the Utah Governor’s Office of Energy Development (OED). Earlier, OED asked the school district to have a third party review its energy upgrade plans.
Thatcher told the board, “The third party review, conducted by Jones and DeMille Engineering, has approved the proposal, and if the board approves the application, we can approach lenders for financing, retain lawyers for drafting final contracts, and get the project in gear.”
“We think now is the time for this project, we don’t think interest rates will go lower, and our need for better heating and air conditioning is critical in more than one of our schools,” said Superintendent Sam Ray.
Several of the older schools in the district, especially Spring City Elementary, the North Sanpete Middle School, and the North Sanpete High School have obsolete environmental systems and/or boilers. Those will be replaced with new, efficient systems. Some of the schools have boilers that are more than 30 years old and on the edge of failing completely.
“The big problem is that these old systems tend to fail when they are needed most, and the likelihood of a catastrophic failure is very real,” said Darin Johansen, district financial administrator. “We don’t want to envision a school having to close because of inadequate heat.”
Air conditioning systems also need to be modernized in many of the schools. Ironically, more air conditioning could decrease the utility savings the district hopes to realize because areas that have not been cooled now could be. But the district will look at these situations on a case-by-case basis.
Both Johansen and Ray recommended to the board that if action was not taken soon to repair the obsolete systems, the expenses of keeping them going or replacing them piecemeal would be higher than the proposed project.
The “Siemens proposal,” a contract between the North Sanpete School District and Siemens, takes advantage of a concept called energy performance contracting. Under the contract, utility savings realized by installing energy-efficient equipment manufactured by Siemens would pay off loans the project.
Siemens estimates that the district could save about $200,000 per year. In fact, Siemens guarantees a certain level of savings. If the savings aren’t realized, Siemens pays the district the difference in cash.
With those benefits explained, following lengthy discussion, the board unanimously approved the motion, which will now be sent to the Utah State Board of Education for their approval.
Also, the Utah State Office of Education also has not yet allocated their 2015 or 2016 money for capital investment projects yet, and the district is also applying for those funds. If approved, it would lower the interest rate of the project even further.