SHIRLEY -- The main issue of the evening during the July 22 Shirley Finance Committee meeting was the committee's recommendation concerning ABM Solutions' Energy and Facility Improvement Plan for seven Shirley town buildings.
Earlier in the month, selectmen agreed to hold a Special Town Meeting on Aug. 5 at 7:15 p.m. in the Ayer-Shirley Regional Middle School auditorium with that one article on the warrant.
The warrant article, if approved, gives the selectmen the authority to enter into an energy savings contract, but does not specify any of the terms of the contract, nor with whom it is contracted.
Rather, the warrant asks the town to consider voting "to borrow the sum of $570,873 in order to initiate an energy savings program (Performance Contracting) in Town owned buildings in accordance with MGL Chapter 25A, with the repayment of the borrowing to be made from guaranteed energy saving accumulated during the life of the borrowing..."
ABM was the company tapped by the Shirley Energy Committee to perform a comprehensive energy audit for the town. The audit was paid for with part of the $165,000 state energy grant the town received after obtaining "Green Community" status.
The plan includes energy improvements for the Shirley Town Offices, Hazen Memorial Library, Shirley Police and Fire department buildings, Dept. of Public Works, War Memorial Building, Senior Center, and Shirley's 209 streetlights.
It meets the mandate of reducing the town's energy consumption by at least 20 percent, is "cost neutral," and could save the town as much as $245,000 over 15 years, according to ABM.
The town would also save up to $920,000 in energy costs. Part of that savings would come from the replacement of inefficient lights, improved insulation and weatherization, and three fuel switches from oil to gas.
FinCom Chair Mike Swanton reminded his fellow committee members that at their last meeting, they had requested from ABM a chart that showed the total cash flow over 15 years for the preventive maintenance program part of the energy reduction plan.
The results show that the town's preventive maintenance costs would average $9,500 per year, beginning with just under $17,000 after the first full year, and gradually decreasing.
For the seven buildings, said Swanton, "it essentially would cost $142,000 over 15 years."
The interesting thing is there's $148,000 we spend over 15 years for the verification and measurement. If after three or four years you are confident that you are saving the amount of money you were supposed to save, it probably wouldn't be worth continuing it," he suggested.
Measurement and verification (M&V) is required for the first three years as a means to track the performance of the equipment and systems. It is used to assure that projected savings occur, to identify opportunities that might impact greater efficiency, and as a means for quantifying and reporting emission reductions.
The first few years you are putting in place something that doesn't exist right now and it comes out a negative, but over 15 years it is pretty much a break even," said Swanton. "The benefit of this is you get some capital stuff done under this that would likely have to be done at some point for bigger bucks over the next two to five years. So you effectively save that.
The other big win is building comfort; the buildings operate the way they are supposed to; and, if they feel the way they are supposed to, then you have buildings that are much more comfortable."
And, Swanton later added, "You do not have to raise taxes to pay for this."
The amount of energy savings for each building would be shifted from that building's budget into debt service. That cost varies from building to building, but averages about $7,000 per building.
To maintain or not maintain?
One of the biggest sticking points for the committee was whether or not to pay ABM to do the maintenance.
Somebody has to pay for the maintenance of the equipment and the building, and if it is not maintained, we cannot come to the state (for additional funds), and through ABM we couldn't get a check back," said FinCom Vice Chairman Stewart Cady, referring to the guarantee by ABM that if the annual energy savings are not as promised, the company will write a check to the town for the difference.
Good capital planning includes budgeting for maintenance," he read from information from the state written for town finance committees. "If we don't do the maintenance over the years, it's not going to work."
The $16,000 a year, on average, for maintenance over 15 years "avoids costs down the road," he added.
A 15-year contract
FinCom Secretary Robert Schuler said that his major concerns were that the work was not being done in-house and the length of the contract.
If we did it in-house, it is going to cost less. The cost built in for ABM plus the cost of the contractors adds to the cost," he said. "We could save more money if we did this ourselves."
There is no way that we have anyone yet who could do this," Town Accountant and FinCom Ex-Officio member Bobbi Jo Colburn replied, referring to the fact that the town has not had a town administrator since last spring.
It is tough to argue against it, because they are guaranteeing a break-even," Schuler conceded. "It is an easy deal to accept if it wasn't for 15 years."
Swanton said that after the major work is done, the town is not required to hire ABM for anything else, and that if M&V shows energy savings over the first three years, "We are not going to spend $10,000 a year to measure it."
As long as things are maintained," Cady reminded him.
If I were ABM, I certainly I wouldn't guarantee anything if I wasn't maintaining it," Schuler said. "They are not going to write you a check unless you do the (M&V)."
If (the town) proceed(s) with this then that provides an opportunity to apply for additional grants that could perhaps apply to this," Swanton said.
A green community rebate of $100,000 and $12,000 from street lighting incentives would cover the down payments. In addition, the estimated $48,861 guarantee in energy savings across all seven buildings would be escalated each year by three percent, the energy standard, according to ABM.
These numbers represent what they would be regardless of who does the work," said Cady. "This is what you need to do to maintain the system...This represents not just ABM, but what it would cost you."
It seems to be reasonably cash neutral and it gets you off the mark and doing something that should be done," said Swanton.
Although fellow FinCom member Joe McNiff expressed deep concern that the proposal was being rushed, the others won the day when it came to convincing him that approving the plan was in the best interest of the town.
This proposal is essentially self-funding. If you were to do something else that cost $500,000 you would have to raise the money," Swanton explained. "You don't have to raise any money (for the energy plan); it is using existing money. You cannot use this existing money for anything else. It is essentially neutral over the course of 15 years."
The FinCom ultimately voted unanimously to recommend favorable action on Article I subject to the stipulation that the initial term of the contract to implement the energy savings program not exceed a term of three years.
The contract with ABM could then be renewed, or not, reasoned the committee.
Cady emphasized that it is the responsibility of the FinCom to point out at town meeting that the energy reduction and maintenance plan saves the town money, and "that not to do this is foolish. You gotta maintain it."