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April 19th School Board Meeting – LED Lighting Retrofit Project Presentation or Misrepresentation?

Misstatement?: Rep from EMC stated lease purchase agreements do not require voter approval; only

bonds do.

Fact: appropriations for lease purchase agreements do require voter approval.

Misstatement?: Rep from EMC stated lighting is typically 20% of electrical load and their savings numbers must fall within that curve, or Eversource will kick the project/application back.

Fact: Our electric bill is approx. $630,000 per year (inc. District Office and all exterior lights). Even with DO & all exterior lighting in the number, 20% is only $127,000. So if our lighting energy cost is only $127,000, how is our energy cost savings approx. $190,000 per year? This is much greater than the 20%, so why wouldn’t Eversource “kick it back”?

(EMC did not state that our electrical load did not fall into the typical range)

Misstatement?: A board member asked if the numbers (referring to the numbers presented) were verified by Eversource. EMC Rep replied yes.

Fact: I reached out to Eversource on 4/22 with questions on their energy savings program and as to whether or not they had verified the numbers presented to the school board and community on April 19th. This was their response, “ We are working with the vendor to correct the record as it appears that the project had not been reviewed prior to the presentation to the school board. I understand that the vendor has been in touch with their school district contact and made them aware that Eversource is currently reviewing the project savings estimates and will communicate the results as soon as the review is complete.”

I am unsure as to whether or not they just confirm the kilowatts (energy) saved, or confirm the cost (dollar) savings.

Misstatement/ Misrepresentation of projected cash flow?: BA stated agreement is a 5 year lease. Presentation shows payment as an 8 year lease. If it is a five year lease, the payment would be much higher, not the $211,000.00 as presented.

Based on an 8 year lease, our interest rate on the loan would have to be approx. 1.5% to get to the $211,000.00 that was presented as payment. I don’t know of any lenders charging such a low rate.

What is the length of the agreement? What is our interest rate? What will our actual payment be?

Documents that I requested show that the interest rate for the loan (quoted on 4/22) is 3.57%. So the interest rate more than doubled in just a few days??

Also, on April 19th it was presented that the amount financed would be $1,579,299.24. The loan application from 4/22 shows the amount financed is going to be $1,782,309.00. So in just a few days the project cost increased by over $203,000.00?

The cost of this project, with interest, is now over $2,045,000.00 (a difference of over $350,000.00 in just 3 days).

Does the Maint. savings shown on the Cost Savings Summary reflect maint/repair/replacement est. costs for years 6-10? (Based on the minimum 5 year warranty stated by EMC)

Does the Maint. savings shown on the Cost Savings Summary include labor? It shouldn’t, unless a sub is used, as the labor of our in house electrician is paid regardless.

I requested the data used to calculate the maint. cost savings. This is what I was told, “The calculation of the maintenance savings number was completed by the consultants as a part of the study, and the materials that you were provided represent the full body of documents in the possession of the district. When the district requested the information used to arrive at the estimates, we were informed by the consultants that the formula and materials were proprietary, and could not be released. As such, we are not in possession of any documents that elaborate upon this matter further”. So, basically I was told that the company that stands to make a substantial amount of money if this project moves forward, gave us the numbers, but won’t tell us how they arrived at the numbers. Think about that for a minute……

Does the project savings on the graph reflect the cost of changing out these fixtures after the approx. 10-12 year life span (stated by EMC)? It doesn’t appear to.

At the current average cost of approx. $150.00 per fixture (stated by EMC), that’s over $1,000,000.00 at today’s cost. What will it be 10-12 years from now? Add in 20%, a conservative number, for the increased cost of the product 11 years from now. Our project cost is now higher than our project savings, and that’s with using the maint. numbers given (with no disclosed basis) and the assumption that our lighting electrical load is almost twice that of the industry standard. If it is based on the industry standards, then our costs are substantial.

EMC Rep stated that the numbers are as close to being guaranteed without guaranteeing it in the presentation given on April 19th. Based on the above facts and the email sent by Siemens to our BA on April 27th, that doesn’t appear to be the case. The email stated, “A few notes to keep in mind are we had not yet finished final engineering………, so the current numbers are based off industry standards and our walkthroughs of the building…..”

So, the numbers presented by the BA and EMC that night had not been finalized? Why was the presentation done before having the final numbers?

In my opinion, the presentation was a gross misrepresentation of the facts. The numbers given were presented as being very “solid” numbers.

EMC Rep stated that they hardly ever see a Return on Investment below 10 years, let alone 6 (which is what the presentation showed). Red flag, maybe? If not, at least a yellow.

During the presentation, The BA stated that there was no appropriation for the lease/purchase agreement. I reached out to the board as you can not have an expenditure without an appropriation. I have since learned that it appears the BA misspoke, and that there is an appropriation so money can be expended for this project.

The BA also stated that the board has the authority to vote on this project, only because the energy cost savings are greater than the lease payment so the budget would not increase by a single penny. Based on his statement, will the board need to rescind their vote as the costs (in year 1), due in part to the corrected finance rate, are now higher than the savings? Should they rescind it regardless, until the final numbers come in and we have the true cost of this project? Do they want to continue to work with a company that appears to have made so many misstatements?

All that being said, please don’t interpret this to mean I am against the LED Lighting Retrofit Program. I am all for switching to LED lighting. I am against misrepresenting the facts to get a project passed.

This is also how our budget continues to creep up. Look at the difference in the numbers that were presented on April 19th, and the numbers just 3 days later, and they are still not final numbers!

I am currently working on a charter amendment that I’m hoping the voters will approve, that will help prevent our budget from increasing due to costs not approved by the voters. Also, there are some additional ways, if supported by the voters, to keep our budget in check.

All of the above is my opinion and interpretation based on the presentation, our budget book, and my review of documents that I requested.

Sincerely,
Cindy Slater


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Updated: May 8, 2022 — 9:20 PM
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