HomeMy Public PortalAbout09-25-2012 BFO report Town of Watertown
Town Council Committee of the Budget and Fiscal Oversight
Meeting: September 19, 2012
Report: September 25, 2012
The Committee convened on September 19, 2012 at 8 pm. Present at the meeting were:
Vincent Piccirilli, Chair; Angie Kounelis,Vice-Chair; Cecilia Lenk, Secretary; Town Manager
Michael Driscoll; Director of Community Development and Planning Steven Magoon;
Purchasing Agent Raeleen Parsons; School Committee Member David Leon; Watertown
Public Schools Director of Business Services Jack Loughran; and Beth Greenblatt of Beacon
Integrated Services,the Town's ESCO consultant. Also attending were the following
members of the Environment and Energy Efficiency Committee: Ken Mirvis, Matthew
Reigert, Stephane Acel-Green, and Charles Bering. Treasurer/Collector Phyllis Marshall
joined the meeting at 9:15 pm.
The purpose of the meeting was to discuss the results of the due diligence on the ESCO
proposal submitted by Johnson Controls, following their energy audit of Town and School
buildings. This action was recommended by the Committee during its February 22, 2012
meeting, and the Committee's recommendation #6 in its March 13, 2012 report,where it
was determined that the Town needed additional review of the proposal before
presentation to the full Council. Ms. Greenblatt conducted the due diligence, in
collaboration with Ms. Marshall, Ms. Parsons, Mr. Piccirilli, Mr. Loughran, and department
heads from the Town and School.
Mr. Driscoll opened the meeting by noting that the Town's FY13 budget policy guidelines
look to working with the Town's selected Energy Services Company (ESCO) to develop and
implement a plan towards reducing municipal baseline energy usage by 20% in five years.
Ms. Greenblatt went through the attached presentation of the due diligence process on the
proposal from Johnson Controls. The original proposal was winnowed down, based on the
cost effectiveness of the individual projects,to a "budget neutral" $6.8M scenario. With
further input from the department heads, some additional items that were previously
identified in the facility maintenance study were added back in to develop an "optimized"
$7.35M scenario which still shows a positive cash flow over the 20 year life of the program.
Attached are two spreadsheets that outline the energy efficiency projects that would be
undertaken in each of 14 Town and School buildings under two proposed scenarios.
Mr. Driscoll stated that he believes the "optimized" scenario represents the best long-term
value for the Town, and he confirmed that the department heads are satisfied with the
scope of work proposed in this scenario.
Mr. Loughran stated that the School Department was satisfied with the scope of work
proposed,but expressed concern over the scheduling of the work in the school buildings.
Ms. Greenblatt explained that much of the work will be performed in non-student areas,
but work in classrooms will be done over the summer or on second shift, and the schedule
Pagel of 2
will be embedded in the final contract. It was noted that about 80% of the work (and about
80% of the energy savings) are in the school buildings.
The financing was discussed,where the entire capital project would be paid for through the
energy savings,based on a budgeted 3% energy cost annual increase over the life of the
contract, at an interest rate of 3.5% or less. The Measurement&Verification provision of
the contract will serve to confirm savings on an annual basis, and if all the savings do not
materialize, Johnson Controls will be required to write a check to the Town to make up the
difference. All were satisfied with this approach, although Councilor Kounelis asked that
energy usage updates be provided quarterly.
Councilor Lenk asked how rebate money would be applied to the debt service, and Mr.
Driscoll suggested that a stabilization fund be set up to capture the rebates as well as the
annual savings from each department's gas and electric line items that will be reserved for
paying down the debt. This will accommodate fluctuations in the annual savings that will
be recognized over the 20 year life of the program.
The timeline was discussed, and if the Council votes to proceed,the contract would be
executed by January,with a loan order brought forward in February, and a bond issue in
March. This would allow Johnson Controls to submit the final design drawings for approval
to order equipment in May, to allow construction in the school classrooms to occur over
the summer 2013.
After further discussion of the proposed options and financial and budget impacts of each,
the Committee unanimously voted the following:
1. Recommend to that the Town Council moves forward on the optimized $7.35M
ESCO project.
2. Recommend that the Town Council direct the Town Manager to negotiate a contract
with Johnson Controls for the ESCO project; including the addition of quarterly
reports of energy usage in all buildings under agreement.
3. Recommend that the Town Council review the establishment of an energy
stabilization fund in which to place rebates, grants, and funds from departmental
energy savings. The energy stabilization fund will be used to pay the debt service on
the energy efficiency projects incurred under the ESCO agreement.
The Manager noted that additional funds will be needed for Beacon Integrated Services to
act as the Town's agent if the Council approves moving forward with the program.
The meeting adjourned 9:50 PM
Submitted by Cecilia Lenk
Page 2 of 2
Town of Watertown
Energy Saving Performance Contracting
Program Review and Update
BEACON
-GRMI'E-L) IT IONS September 19, 2012
�d
Performance Contracting Overview
General Approach
Design-build energy efficiency project that leverages
existing operating and energy budgets to implement
turnkey energy efficiency and renewable energy
solutions:
� Upgrade building infrastructure and increase building efficiency
❑ Reduce operating and maintenance costs
Enhance operating staff productivity
Implement renewable energy strategies
Improve indoor air quality
Enhance core curriculum by integrating innovative technologies
with educational objectives
I3 F A Go,N Town of Watertown Slide 2
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Performance Contracting Overview
Illustrative Example - 2596 Operating Cost Savings
100 -
Savings used to
Paj- debt obligation
75 -
m
2- 50 -
0
a
25 - ---------- -----
o 1 1
Before Program During Program After Program
■Annual Operating Budget ❑Annual Carrying Cost of Program
13 E AC�a N Town of Watertown Slide 3
.I.I G 1111)M1.11'1[Otiff
Program
Winnowing Process to Achieve Best Value
JCI identified total technical
JCI Conducted Detailed Energy Audit potential for energy
infrastructure upgrades in
specified buildings
Town and School stakeholders
Stakeholder Reviews and Winnowing reviewed and eliminated projects
based on priorities and economics
Town and School stakeholders and JCI
Stakeholder Final Optimization optimized project comprehensiveness
to meet Town financial requirements
�h
I3 E A�a N Town of Watertown Slide 4
.I.I G�I.11)ti[ll.l]'1[Otiff
Program
Winn o wing Process Results
Total Technical Potential - Original Proposal
16 Town and School Buildings
❑ 145 Energy Infrastructure Upgrade Projects
❑ $10.6 Million in Energy Infrastructure Investments
❑ Cashflow: -$1 .22 million during first 11 years; -$61,000 over 20
years.
Winnowing - Scope Refinement #1
15 Town and School Buildings (removed Old Police Station)
❑ 118 Energy Infrastructure Upgrade Projects
❑ $8 Million in Energy Infrastructure Investments
❑ Cashflow: -$278,000 during first 6 years; $1 .9 million over 20
years.
I3FAGaN
Slide
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Program
Budget Neutral Project — Project #1
Final Project with No Budget Impact
14 Town and School Buildings
91 Energy Infrastructure Upgrade Projects
$6.8 Million in Energy Infrastructure Investments
Cashflow: -$51,626 over the first three years; $2.45 million
over 20 years. Utility rebates of approximately $250,000 used
to offset cashflow impact in early years.
I3FAGaN
Slide
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JC1 Pro osed ProgramP
Budget Neutral Project
Simple
Annual Payback in
Facility Project Cost Savings Rebates Years
Watertown High School $1,959,803 $131,333 $48,992 14.5
Watertown Middle School $689,791 $58,925 $52,090 10.8
Hosmer Elementary School $870,227 $74,727 $33,976 11.2
Lowell Elementary School $1,024,666 $55,721 $38,171 17.7
Cunniff Elementary School $807,959 $27,324 $18,002 28.9
Phillips Elementary School $440,149 $26,602 $2,397 16.5
Watertown Town Hall $415,289 $10,822 $14,350 37.0
Watertown Library $107,030 $16,372 $11,324 5.8
Main Fire Station $70,328 $5,126 $3,166 13.1
North Fire Station $20,842 $1,974 $25 10.5
East Fire Station $10,191 $982 $22 10.4
Department of Public Works $211,303 $27,949 $7,257 7.3
Ice Rink $133,318 $23,504 $17,783 4.9
Senior Center $17,208 $1,095 $1,940 13.9
Investment Grade Audit Cost $37,565 - - -
Total I $6,815,670I $462,4561 $249,4951 14.2I
I3 F A G o,N Town of Watertown Slide 7
1"'1i'•i�
JC1 Pro osed ProgramP
Cashflo w Analysis at 3. 1991o' Net Interest Costs
TOTAL ANNUAL COST ANNUAL SAVINGS ANNUAL
YEAR Debt Service* M&V Total Total CASHFLOW
1 $474,819 $19,800 $494,619 $462,456 $32,163
2 $473,319 $20,394 $493,713 $476,330 $17,383
3 $471,694 $21,006 $492,700 $490,620 $2,080
4 $469,944 $21,636 $491,580 $505,338 $13,758
5 $473,069 $22,285 $495,354 $520,498 $25,144
6 $470,944 $22,954 $493,897 $536,1 13 $42,216
7 $473,694 $23,642 $497,336 $552,197 $54,861
8 $471,194 $24,352 $495,545 $568,763 $73,217
9 $472,806 $25,082 $497,888 $585,825 $87,937
10 $473,750 $25,835 $499,585 $603,400 $103,816
11 $472,375 $26,610 $498,985 $621,502 $122,518
12 $470,650 $27,408 $498,058 $640,147 $142,089
13 $473,575 $28,230 $501,805 $659,352 $157,547
14 $470,975 $29,077 $500,052 $679,132 $179,080
15 $473,025 $29,949 $502,974 $699,506 $196,532
16 $474,550 $30,848 $505,398 $720,491 $215,094
17 $470,550 $31,773 $502,323 $742,106 $239,783
18 $471,200 $32,726 $503,926 $764,369 $260,443
19 $471,325 $33,708 $505,033 $787,300 $282,267
20 $470,925 $34,719 $505,644 $810,919 $305,275
$9,444,381 $532,033 $9,976,415 $12,426,366 $2,449,951
Debt service is based on assumption of level payments with a net interest cost of 3.19%.
Total principal borrowed of $6,815,000 includes the cost of the Investment Grade Energy Audit.
Debt service is before rebates of $249,495 which will be used to offset early year cashflow impacts.
I3 F A Go,N Town of Watertown Slide 8
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JC1 Pro osed ProgramP
CashflowAnalysls at 3.5916 Net Interest Costs
TOTAL ANNUAL COST ANNUAL SAVINGS ANNUAL
YEAR Debt Service* M&V Total Total CASHFLOW
1 $478,525 $19,800 $498,325 $462,456 $35,869
2 $480,125 $20,394 $500,519 $476,330 $24,189
3 $481,375 $21,006 $502,381 $490,620 $1 1 ,761
4 $477,275 $21,636 $498,91 1 $505,338 $6,427
5 $478,000 $22,285 $500,285 $520,498 $20,213
6 $478,375 $22,954 $501,329 $536,1 13 $34,785
7 $478,400 $23,642 $502,042 $552,197 $50,154
8 $478,075 $24,352 $502,427 $568,763 $66,336
9 $477,400 $25,082 $502,482 $585,825 $83,343
10 $481,375 $25,835 $507,210 $603,400 $96,191
11 $479,825 $26,610 $506,435 $621,502 $1 15,068
12 $477,925 $27,408 $505,333 $640,147 $134,814
13 $480,675 $28,230 $508,905 $659,352 $150,447
14 $477,900 $29,077 $506,977 $679,132 $172,155
15 $479,775 $29,949 $509,724 $699,506 $189,782
16 $481,125 $30,848 $51 1,973 $720,491 $208,519
17 $481,950 $31,773 $513,723 $742,106 $228,383
18 $482,250 $32,726 $514,976 $764,369 $249,393
19 $482,025 $33,708 $515,733 $787,300 $271,567
20 $481,275 $34,719 $515,994 $810,919 $294,925
$9,593,650 $532,033 $10,125,683 $12,426,366 $2,300,682
Debt service is based on assumption of level payments with a net interest cost of 3.5%.
Total principal borrowed of $6,815,000 includes the cost of the Investment Grade Energy Audit.
Debt service is before rebates of $249,495 which will be used to offset early year cashflow impacts.
I3 F A Go,N Town of Watertown Slide 9
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Program
Optimized Project - Project #2
Winnowing - Scope Refinement #2
14 Town and School Buildings
97 Energy Infrastructure Upgrade Projects
$7.35 Million in Energy Infrastructure Investments
Cashflow: -$144,281 over the first four years; $1 .97
million over 20 years. Utility rebates of approximately
$274,000 used to offset cashflow impact in early years.
I3FAGaN
Slidel0
t'j'•i�
JC1 Pro osed ProgramP
Optimized Project
Simple Payback
Facility Project Cost Annual Savings Rebates in Years
Watertown High School $1,959,803 $131,333 $48,992 14.5
Watertown Middle School $689,791 $58,925 $52,090 10.8
Hosmer Elementary School $870,227 $74,727 $33,976 11.2
Lowell Elementary School $1,024,666 $55,721 $38,171 17.7
Cunniff Elementary School $807,959 $27,324 $18,002 28.9
Phillips Elementary School $440,149 $26,602 $2,397 16.5
Watertown Town Hall $415,289 $10,822 $14,350 37.0
Watertown Library $107,030 $16,372 $11,324 5.8
Main Fire Station $260,089 $6,952 $10,166 35.9
North Fire Station $20,842 $1,974 $25 10.5
East Fire Station $121,367 $1,662 $3,522 70.9
Department of Public Works $211,303 $27,949 $7,257 7.3
Ice Rink $307,539 $31,225 $31,833 8.8
Senior Center $91,624 $1,627 $1,961 55.1
Investment Grade Audit Cost $37,565 - - -
Total 1 $7,365,2451 $473,2151 $274,066 15.0
I3 F A G o,N Town of Watertown Slide 11
1"'1i'•i�
JC1 Pro osed ProgramP
Cashflo w Analysis at 3. 1991o' Net Interest Cost
TOTAL ANNUAL COST ANNUAL SAVINGS ANNUAL
YEAR Debt Service* M&V Total Total CASHFLOW
1 $512,175 $19,800 $531,975 $473,215 $58,760
2 $510,175 $20,394 $530,569 $487,41 1 $43,158
3 $508,050 $21 ,006 $529,056 $502,034 $27,022
4 $510,800 $21 ,636 $532,436 $517,095 $15,341
5 $508,300 $22,285 $530,585 $532,608 $2,023
6 $510,675 $22,954 $533,629 $548,586 $14,957
7 $512,800 $23,642 $536,442 $565,043 $28,601
8 $509,675 $24,352 $534,027 $581,995 $47,968
9 $510,600 $25,082 $535,682 $599,455 $63,773
10 $510,825 $25,835 $536,660 $617,438 $80,779
11 $508,575 $26,610 $535,185 $635,961 $100,777
12 $510,975 $27,408 $538,383 $655,040 $1 16,657
13 $512,850 $28,230 $541,080 $674,691 $133,61 1
14 $509,200 $29,077 $538,277 $694,932 $156,655
15 $510,200 $29,949 $540,149 $715,780 $175,631
16 $510,675 $30,848 $541,523 $737,254 $195,731
17 $510,625 $31,773 $542,398 $759,371 $216,973
18 $510,050 $32,726 $542,776 $782,152 $239,376
19 $508,950 $33,708 $542,658 $805,617 $262,959
20 $512,325 $34,719 $547,044 $829,785 $282,741
$10,208,500 $532,033 $10,740,533 $12,715,464 $1,974,931
* Debt service is based on assumption of level payments with a net interest cost of 3.1 9%.
Total principal borrowed of $7,365,000 includes the cost of the Investment Grade Energy Audit.
Debt service is before rebates of $274,066 which will be used to offset early year cashflow impacts.
I3 F A Go,N Town of Watertown Slide 12
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JC1 Pro osed ProgramP
CashflowAnalysls at 3.5916 Net Interest Cost
TOTAL ANNUAL COST ANNUAL SAVINGS ANNUAL
YEAR Debt Service* M&V Total Total CASHFLOW
1 $517,775 $19,800 $537,575 $473,215 $64,360
2 $518,675 $20,394 $539,069 $487,41 1 $51 ,658
3 $519,225 $21,006 $540,231 $502,034 $38,197
4 $519,425 $21,636 $541,061 $517,095 $23,966
5 $519,275 $22,285 $541,560 $532,608 $8,952
6 $518,775 $22,954 $541,729 $548,586 $6,857
7 $517,925 $23,642 $541,567 $565,043 $23,476
8 $516,725 $24,352 $541,077 $581,995 $40,918
9 $520,175 $25,082 $545,257 $599,455 $54,198
10 $518,100 $25,835 $543,935 $617,438 $73,504
11 $515,675 $26,610 $542,285 $635,961 $93,677
12 $517,900 $27,408 $545,308 $655,040 $109,732
13 $519,600 $28,230 $547,830 $674,691 $126,861
14 $515,775 $29,077 $544,852 $694,932 $150,080
15 $516,600 $29,949 $546,549 $715,780 $169,231
16 $516,900 $30,848 $547,748 $737,254 $189,506
17 $516,675 $31,773 $548,448 $759,371 $210,923
18 $520,925 $32,726 $553,651 $782,152 $228,501
19 $519,475 $33,708 $553,183 $805,617 $252,434
20 $517,500 $34,719 $552,219 $829,785 $277,566
$10,363,100 $532,033 $10,895,133 $12,715,464 $1 ,820,331
Debt service is based on assumption of level payments with a net interest cost of 3.5%.
Total principal borrowed of $7,365,000 includes the cost of the Investment Grade Energy Audit.
r. Debt service is before rebates of $274,066 which will be used to offset early year cashflow impacts.
A Ga,N Town of WatertownSlide 13
�
Program
Impact on Investments
Energy Conservation Measures Excluded from Budget
Neutral Project:
Boiler Replacements
Main Fire Station
East Fire Station
Ice Rink
Senior Center
Temperature Setback
Senior Center
Convert Electric Baseboard Heat
Ice Rink
Financial Impact:
Investment Cost: $550,000
• Annual Savings: $10,750
gE pNC�C)T-N Town of Watertown Slide 14
J 1�1f'[:!!.1'1F1Y ti[Y[.1I 11�
Next Steps
Thank You
Beacon Integrated Solutions
P.O. Box 320325
Boston, MA 02132
bgreenblatt@beacon-llc.com
www.beacon-llc.com
13 F A Ga,N Town of Watertown Slide 15
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I Financial Summary
Project Construction Cost $6,778,105
Deatailed Energy Audit Cost $37,565
Total Cost $6,815,670 lEnter 1 in ECM Matrix below to Include scope by ECM and Building
First Year Energy/Water Savings $462,456 lEnter 0 in ECM Matrix below to Exclude scope by ECM and Building
First Year Measurement and Verification Cost $19,800
Estimated Utility Rebates $249,495
Payback 15.40
c c °o r c — c v a °o
3 0 3 L — « « 3 m 3 y u c c = c v c 0 0 c Y c
« L « �n £ c p d o p c c o °. c o Y 2 Y L p 0 ii o W ° Y p a C O c v
ECM# Description of Measure t v o £ L 3 E L c E L E L 3 a o@ c « ' E 3 E
V O U V L U
16 00 R 2 01 J W U d O. y 10 O 10 J VI Vf O v1 Vf M
3 x c W W W W ~ O 2 Z W y 1 V C y
C
1 Lighting-Fixture Retrofit r/ r/ ® r/ 1 X X I f X 0 f ,/
2 Lighting-Fixture Controls r/ X 0
3 Building Envelope-Weatherization r/ r/ ® r/ X 0
4 Building Envelope-Roof/Attic Insulation ti/ ® X 0
5 Building Envelope-Window Replacement
6,7,8 Building Controls-Temperature Setback r/ 4f �./ 4f �./ %r -e ® r/ 1 X X I f
9 Air Handling Unit/RTU Replacement I X
10 Condition A-HVAC Mechanical Rehab r/ L—Xi �.r X X X
11 Air Handling Unit-VFD on Fans r/ r/ %r
12 Heating System-Boiler Replacement
13 Heating System-Steam Trap Replacement f �/
14 Heating System-Pipe/Valve/Duct Insulation f f r/ r/ 1 X X 7 r/ X
15 Pumping System-VFD on Hot Water Pumps f r/ r/
16 Repair or Replace Heat Recovery Heat Wheel �2
17 Electric Baseboard to Hot Water Baseboard
18 Kitchen Hood-VFD on Exhaust Fan
19 Water Conservation X X .r T
20 Vending Machine Controllers ® X X X X Z
21 Walk-in Coolers/Walk-in Freezers f r/ r/
22 Energy Efficient Transformers r/ r/ %r 4f
23 Chiller and Dehumidification Control v
24 Building Envelope-Window Film X
25 Chiller Replacement
26 Install new AC Units X
27 Install Low-e Ceiling T
28 Roof Replacement Z
29 Reduced Scope High School-Controls
30 Replacement Unit Ventilators r/
31 Replace 2nd Boiler at Phillips School X
Totals
ILeeend;
./ Measure(s)Selected
X Measure(s)not included in this package
I Financial Summary
Project Construction Cost $7,327,680
Deatailed Energy Audit Cost $37,565
Total Cost $7,365,245 lEnter 1 in ECM Matrix below to Include scope by ECM and Building
First Year Energy/Water Savings $473,215 lEnter 0 in ECM Matrix below to Exclude scope by ECM and Building
First Year Measurement and Verification Cost $19,800
Estimated Utility Rebates $274,066
Payback 16.24
c c °o r c — c v a °o
3 0 3 L — « « 3 m 3 y u c c = c v c 0 0 c Y c
« L « �n £ c p d o p c c o °. c o Y 2 Y L p 0 ii o W ° Y p a C O c v
ECM# Description of Measure t v o £ L 3 E L c E L E L 3 t o o m c M « ' E 3 E
V O U V L U
16 00 R 2 01 J W U d O. y 10 O 10 J VI Vf O v1 Vf M d _ O
3 x c W W W W ~ O 2 Z W y 1.1 V C y
C
1 Lighting-Fixture Retrofit r/ f %r 4f %r %r r/ r/ ® r/ 1 X X I f X 0 f ,/
2 Lighting-Fixture Controls r/ ® r/ X 0
3 Building Envelope-Weatherization r/ r/ ® r/ X 0
4 Building Envelope-Roof/Attic Insulation ti/ ® X 0
5 Building Envelope-Window Replacement
6,7,8 Building Controls-Temperature Setback r/ 4f �./ 4f �./ %r r/ ® r/ 1 X X I f
9 Air Handling Unit/RTU Replacement I X
10 Condition A-HVAC Mechanical Rehab r/ L—Xi �.r X X X
11 Air Handling Unit-VFD on Fans r/ r/ %r
12 Heating System-Boiler Replacement
13 Heating System-Steam Trap Replacement f r/
14 Heating System-Pipe/Valve/Duct Insulation f r/ r/ r/ 4f llv� F X X 7 f 9 T
15 Pumping System-VFD on Hot Water Pumps r/ r/ r/
16 Repair or Replace Heat Recovery Heat Wheel Z
17 Electric Baseboard to Hot Water Baseboard
18 Kitchen Hood-VFD on Exhaust Fan f r/ f r/
19 Water Conservation ./ ./ 4f X X .r T
20 Vending Machine Controllers ® X X X X Z
21 Walk-in Coolers/Walk-in Freezers f r/ r/
22 Energy Efficient Transformers r/ r/ %r 4f
23 Chiller and Dehumidification Control v
24 Building Envelope-Window Film X
25 Chiller Replacement
26 Install new AC Units X
27 Install Low-e Ceiling T
28 Roof Replacement Z
29 Reduced Scope High School-Controls
30 Replacement Unit Ventilators r/
31 Replace 2nd Boiler at Phillips School X
Totals
ILeeend;
./ Measure(s)Selected
X Measure(s)not included in this package