The Miami Springs council held its last regular meeting of 2012 on Monday night, Dec. 10 and the presentation by an energy group to improve the city’s infrastructure while saving dollars piqued interest.
A company named Energy Systems Group (ESG) approached the City of Miami Springs a few months ago regarding a feasibility study to determine if they could recommend a project that would save the city in energy and operating costs.
City Manger Ron Gorland had given ESG the go-ahead to conduct such a study, at no cost to the city, and the results were impressive. All the background checks on ESG had been completed and City Attorney Jan Seiden had even negotiated a contract to take the next step with ESG.
Bryan Reardon of ESG made a presentation to the council that laid out a $1.8 million plan that could save the city approximately $125,000 in energy costs per year. It included new LED street lighting, new air-conditioning units at three locations (the golf course, senior center, and city hall) and new lighting at the community center.
The ESG plan included guarantees that the savings would be as projected and the debt service on the required financing would be paid for out of those savings. The project would not affect the city’s budget going forward and an improved infrastructure at the end would be another benefit.
“There is no upfront cost and we guarantee a positive cash flow to the city,” Reardon said as his PowerPoint presentation progressed. “The next phase will be on our dime, too, with the understanding that we will be able to negotiate a final contract on the project. If we aren’t able to do that, the maximum exposure to the city is $10,000.”
ESG would act as the construction manager and Reardon promised to work with local contractors if possible. The energy savings, estimated to reduce utility consumption and emission by 20 to 40 percent, would be enough to cover the debt service each year. He estimated a 13-year payoff on financing.
“This was brought to us and we liked it,” said Gorland. “All of ESG’s references checked out and it is a clean deal. As an aside, we learned that we bought the wrong kind of lights at the new community center.”
The savings would be generated immediately and ESG promised to help get a financing package, probably at 2.3-2.5 percent interest. A savings report would be generated each year and if ESG did not meet their guarantee, a check for the shortfall would be given to the city.
“You have to understand that this will not affect the budget,” said Finance Director William Alonso. “The loan amount would be around $1.8 million, but the difference is that they (ESG) are guaranteeing the savings and we pay for the project out of those savings.”
It was projected that the next phase, a complete detailed final study by ESG, would take about 90 days and Reardon estimated it would take six months of construction to complete the project.
“I spent a lot of time going over the next step, what you call ‘sticking your toe’ into the agreement,” Seiden said, “and even if they came up with a reasonable plan and you don’t agree with it or don’t want to go forward, your maximum exposure would be $10,000.”