New Central Energy Plant will be a publicly financed project, County Commission decides

Implementation of energy-saving measures and county’s ‘excellent credit rating’ contribute to cost savings over private option

A graphic shows the facilities served by the Central Energy Plant in downtown Sarasota. Image courtesy Sarasota County

Given the cost savings afforded by Sarasota County’s “excellent credit rating,” as a senior staff member put it, the County Commission this week voted unanimously to pursue the construction of a new Central Energy Plant as a public project.

Estimates have shown that will save the county about $13 million, Jeff Lowdermilk, director of the county’s General Services Department, explained to the board on June 12.

After taking an in-depth analysis of the expense of a private project compared to a public one, Lowdermilk said, staff recommended the latter. Using a conservative estimate of 4% interest on a 20-year loan of $21.4 million, he said, the annual debt service would be $1.6 million.

A graphic explains the process allowed under state law that the county pursued to reach this point. Image courtesy Sarasota County

However, the implementation of energy-saving measures as part of the process is expected to reduce the annual net cash outflow to $1,110,000, he noted. The loan would cover the cost of implementing those measures, he added.

The debt service payments would not begin until the 2020 fiscal year, Lowdermilk pointed out.

The private option would have allowed a private company to bid to construct the facility, which will provide air conditioning to what Lowdermilk characterized as “a multitude of critical facilities and operations in the downtown Sarasota corridor.” Among those are the jail; the offices of the Sarasota County Supervisor of Elections, Tax Collector and Property Appraiser; the offices of the Clerk of Court and County Comptroller; the 12th Judicial Circuit Court facilities; the State Attorney’s Office; and the Public Defender’s Office.

Because many components of the Central Energy Plant — or “chiller plant” — are at the end-of-life stage, he pointed out, “We clearly need to replace [it].”

If all goes as planned, according to a June 12 staff memo, the construction of the new chiller plant could begin in January 2019; completion tentatively would take 12 to 14 months.

A graphic explains the operations of the Central Energy Plant and shows its location in Sarasota. Image courtesy Sarasota County

“We really pushed staff [to get to this point],” Commissioner Alan Maio said, “knowing how we could have a catastrophe looming if this old plant goes down.” Already, Maio added, county staff has had to have parts delivered by air freight when components have failed. Thanks to the work of staff, the vote on how to proceed with constructing the new facility is about four to six months ahead of the schedule originally envisioned, he noted.

“This is a huge step, and something that we’ve been talking about for many years,” Commissioner Charles Hines said.

Lowdermilk explained that staff would be back before the board during its regular meeting on July 10 for approval of a contract with Trane US to complete the design of the new facility. The board on June 12 also voted to increase by $1 million the allocation for that stage of the project. The county will pay a total of $1,250,000 for all the necessary construction documents, the application county staff will submit to the City of Sarasota for its approval — as the construction will be in the city — and the permitting process, according to documentation provided to the commission in advance of the June 12 meeting.

Soon after the 2019 fiscal year begins on Oct. 1, Lowdermilk anticipates coming back to the board with the bond resolution for the chiller and the energy-saving measures.

Jeff Lowdermilk. File photo

The new chiller plant will be constructed on part of the surface lot adjacent to the county parking garage on Ringling Boulevard, located at the School Avenue intersection. That will enable the Florida Department of Health in Sarasota County — whose complex is on School Avenue — to be served by the facility, as well, Lowdermilk noted.

Additionally, the design likely will incorporate underground piping valves that would enable other entities to connect to the chiller, he said. Staff of the City of Sarasota has indicated potential interest in doing that, Lowdermilk added.

The aging chiller plant — built in 1998 — stands next to the Criminal Justice Center and the east wing of the jail, at the corner of Main Street and East Avenue in downtown Sarasota. It houses three 680-ton chillers with three cooling towers, along with two emergency generators and other equipment, the June 12 staff memo explained.

The energy audit

As part of its June 12 vote, the commission also approved the proposed list of energy conservation measures. That list was developed through an energy audit the county pursued under the aegis of Florida Statute 489.145. That law allowed the county to contract with a provider to implement energy-saving projects, with compensation to the provider directly linked to the actual reduction in expenses over a maximum of 20 years, Lowdermilk explained. On Oct. 31, 2017, the commission approved a contract with Trane US for the Investment Grade Energy Audit, as allowed by the statute.

That audit was a comprehensive study of 12 major county buildings, including all those served by the chiller; targeted studies of heating, ventilation and air conditioning (HVAC) systems, lighting, water conservation, window treatments and electrical transformers at 33 buildings —  among them, county libraries and Sarasota County Area Transit (SCAT) facilities; targeted system studies of lighting, water conservation and electrical transformers at 24 fire stations; and four other studies, including countywide street lighting and window treatments, the staff memo added.

The county priority with the audit, Lowdermilk explained, was to look for options that would have a payback period of 10 years or less. If the period were longer, he noted, Trane had to justify it because of major savings that could be achieved.

Altogether, he said, 27 new projects have been identified, with an expense of $3.4 million. The annual savings they would achieve has been put at $398,000, with a payback period of 8.5 years for the expense of implementing them, Lowdermilk told the board. Two others already are included in the county’s Capital Improvement Program (CIP) to be undertaken within three years. Those would cost $2.3 million, with annual savings of $33,000 expected.

Public or private?

A graphic provides information about ownership options staff and the commission considered in regard to the new plant. Image courtesy Sarasota County

During the discussions about cost estimates for the public and private options for constructing a new chiller plant, Lowdermilk continued, staff discovered that the public ownership option would lead to $13.1 million in savings to the county’s General Fund over 25 years. (The General Fund, which includes property tax revenue, has been called the county’s most constrained account. It pays for the budgets of the county’s constitutional officers — such as the sheriff and the supervisor of elections — and operations of departments for which the County Commission has oversight, including Parks, Recreation and Natural Resources, and Libraries and Historical Resources.)

“I would have thought that the private way would have been the way to go,” Commissioner Maio said. However, after discussing the options with Lowdermilk, Maio continued, he was convinced the public option was the better one.

Commissioner Hines concurred, saying he originally had favored the private concept, as well, with the county renting the facility. That way, he said, the company that built the chiller plant would be the entity dealing with any equipment failures.

“I’m comfortable going forward,” said Commissioner Paul Caragiulo, who made the motions on June 12 to proceed with Lowdermilk’s recommendations.

Commissioner Michael Moran was not present for the meeting because of a death in the family, Chair Nancy Detert reported.