City’s energy savings plan didn’t pan out
Jeremy M. Lazarus | 4/5/2016, 8:27 p.m.
Earlier this year, City Hall rejected a proposal to use energy savings to pay for $13 million in improvements to an array of city buildings, including replacing old boilers, aging windows and outdated lighting.
The reason: The proposal that Siemens Corp. advanced would have led the city to overpay for work it could do itself, or which it could finance at a lower interest cost, according to Selena Cuffee-Glenn, Richmond’s chief administrative officer.
Siemens has not responded to repeated requests for comment on the city’s rejection of its proposal that Ms. Cuffee-Glenn and her staff consider an expensive boondoggle.
The proposal called for the city to pay for the cost of the work over 15 years, said John Buturla, deputy chief administrative officer for operations, who previously has used such performance programs.
He said up to half the items that Siemens proposed to install, including windows, lighting and door, would be written off over three to five years, making it unreasonable to finance them over 15 years.
He said the city can do most of such projects with its own workforce and with existing funds rather than farming out the work to Siemens at a higher cost.
Mr. Buturla said he found little need to engage Siemens in bigger projects involving the replacement of heating and cooling systems.
Virtually all of the work Siemens proposed on that score is included in the city’s capital program. “We already were planning to do them,” he said.
As a municipality, the city can borrow at lower interest rates than Siemens planned to charge, he said.
Mr. Buturla said that after closely examining the plan, it did not seem to offer much value to the city.
Ms. Cuffee-Glenn noted the city also had to be careful as the Siemens proposal would have added to the city’s debt level at a time when its borrowing capacity is limited.
While not official debt, this type of plan would have been considered a moral obligation of the city, and rating agencies would have included it in the city’s debt burden.
She sad the good news for the city is that Siemens’ detailed proposal, for which the city paid about $300,000, would provide a blueprint for the work the city needs to do in more than 30 of its buildings.
While the city didn’t find much benefit, Mr. Buturla said that energy savings could be one way Richmond Public Schools might be able to pay for renovation of a few of its aging buildings.
Tommy Kranz, RPS’ assistant superintendent for operations, has said he is looking into using energy savings as a source to finance building improvements and hopes that up to $18 million might be generated. It could take a year for the detailed studies to be completed to determine whether energy savings could become another source of funding.