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Clarksville City Council Special Session Recap, March 11th, 2013

 

Clarksville City Council - Ward 10Clarksville, TN – The Clarksville City Council met in a special session last evening (March 11th) at the direction of Clarksville Mayor Kim McMillan. The purpose was to conduct the second (all ordinances require two votes for passage) vote on a spending ordinance 72-2012-13.

As a brief background, the ordinance would have increased an approved spending request of $190,000 for a new chiller (AC Unit) for Clarksville City Hall. The increase would have raised the total expense to over one million dollars. This increase was due to buying a more efficient chiller (cost: $384,000) and replacing lighting fixtures in eight buildings for more efficient units at a cost of over $610,000.  The initial vote of approval on this ordinance was held last Thursday (March 7th) and ended in a 6 – 6 tie that Mayor McMillan voted yes to provide passage of the ordinance.

The March 11th session began with additional questions on specific aspects of the concept and contract.  Two important issues were brought up by council members.

First, as with many special government grants or loan programs, there are stipulations on how long a program or changes must remain in place after the money is spent. It is a waste of taxpayer money to get such grants to install a program (or equipment) and then turn around and do away with it as soon as the money is spent. If certain timeline requirements are not met, there can be requirements for partial or full repayment of the grant/loan money provided.

Also, if rules are not followed, it can establish a pattern that can hurt the city in trying to gain future grants or special loans. We know the rules were the savings had to be 20% of previous energy costs, the bond/loan interest amount was to be rebated, payback was 15 years and the loan should be repaid in 12 years.

I asked what was the time requirement to retain the buildings that had new lighting systems placed within them (how long must the 20% energy savings be recorded), the answer was not known by the city staff.  That question and answer piggybacked onto another question.  I also asked what is the penalty if the city did not meet whatever the time requirements are for keeping the new light systems in place?  The answer was not known.

As readers will recall, this could be a very important question as the city has looked to sell the Gas & Water building in the past and a tornado destroyed another city building. The concern with timelines and penalties was due to how long would the city’s hands be tied with having to keep or maintain these buildings and show a savings if a future council wished to move or build new facilities to meet city functional needs.

Councilwoman Jones proposed an amendment to postpone the ordinance till the next city budget was completed (July) and we had answers to the questions asked. This would allow time to see the impacts of recently seen or expected changes in the local job market and revenue situation of the city. Her amendment failed in a 5-yes & 7-no vote. I voted in support of it.

Councilman Burkhart then asked a question that if we approved the ordinance the chiller could then be ordered, but we would not have to address the lights immediately? The answer by the Finance Department was that is correct, that the city could pay to buy the chiller, but the plan was to buy the lights and use the bonds to finance the whole project.

I had a follow-up question related to the fact that this whole project was being presented as an equipment and financial package that was tied very tightly together. So how could council members support this spending ordinance tonight stating the council agreed to a million dollar project and then turn around and change votes saying we were not going to pay for it in the manner documented?

If we don’t pay as prescribed, then the bond/loan method could not be used. It seemed illogical to support the project as stated and then turn around later and ambush it by not approving the payment method.

During this line of discussion about a chiller, or chiller and lights, or project paid this way or paid that way, it seemed that more holes were appearing in the project setup.  It now appeared the final numbers of the light project were close to, but not 100%, finalized.  In previous questions if one or two buildings were taken out, then there were other buildings that could replace them.  However, if the chiller was paid separately, there may not be enough other buildings to make up the savings difference.

During these discussions Councilwoman McLaughlin proposed an amendment to eliminate the lights and buy the upgraded chiller at $384,000. More questions were raised after the amendment was placed on the floor. It was stated that the current chiller was still running. It is running, but it is in poor shape. If it goes down, City Hall would likely have to shut down and move operations. The upgraded chiller could be on site in three weeks. The regular chiller would take 9 -12 weeks. The theory was we needed the upgraded model as it could be here sooner. It would also take several days to install it.

Around this time, about 45 minutes into the session, Councilman Burkhart left the meeting.

The vote was taken on the McLaughlin amendment with a 7-yes & 5-no outcome. The mayor voted no. The approved amendment was now the ordinance to be voted on. So now the ordinance would request that an additional $194,000 would be added to the $190,000 currently approved for a chiller.

The Finance Department was not sure that the city had enough money to pay the additional $194,000. The mayor called for a break in the session so that could be checked. After checking, it was determined we had the money.

The initial vote was 6-yes & 5-no with the mayor not showing a vote. After about 6 or 7 seconds the mayor recorded a no vote. I voted yes. The vote was tied and the ordinance did not pass.

Final Analysis

So the bottom line after all of this is the original $190,000 chiller project will still be the action be taken. No upgrade and no lights were approved. It was interesting that the mayor did not support the upgraded chiller as the votes were there, if she voted yes.

Yes, it would have cost an additional $194,000, but it would have been supportive of the mayor’s previous debates that we needed to be green and save energy. The chiller was needed now, the upgraded model had a 25-year life span and the energy savings would have paid for that cost increase in about 20 years with $9558 in energy savings/year. The regular energy chiller would cost $190,000, use the same amount of energy as the current model and last for 15-years. If you amortized the initial purchase cost of each chiller and the energy savings produced against the life cycle of each machine, the upgraded model was the more cost efficient choice ($12,667/year for the original equipment replacement chiller vs. $5802/year for the upgraded model).

Perhaps, if we had been able to openly bid the two chiller options, the purchase price might have been even lower (under TN state law when selecting/using a professional engineering service for energy projects and that service also supplies and installs the equipment it carries, you do not bid out the equipment portion as a separate process). So financially, since the chiller was an immediate equipment need and the math showed the upgraded version was the better buy (in the long run) why didn’t the mayor support it?

During the check of the fund balance to see if the city could afford an additional $194,000, it was stated the fund balance was at 22%. The initial 2013-2014 budget was $81 million for the city an increase of almost $6 million over what was spent the previous budget year and almost $ 9 million more than the budget year before that. The fund balance (rainy day fund) by code has to be 20%. That difference in money is about $1.6 million (22% vs 20%). The projected difference by the end of the current budget was to be around $2.7 million.

Sales tax collections this budget year have been lagging when compared to last year. Recent economic impact projections suggest it could get worse in the remaining four months of this budget year. Taking another $194,000 out of the fund balance makes that gap even tighter. I had previously stated in 2011 we saw this administration try to convince the council to borrow money in order to save cash that had been set aside for the airport. That effort failed, the needed cuts did not take place in the next budget and about $3 million had to be borrowed to balance the budget.

The effort to bond/loan the chiller and lighting amount and the refusal to spend more on a chiller that was more cost efficient in the long run seems to be a repeat of actions seen in 2011.  The financial picture will come clearer within the next 90 days and we will see where all the pieces lay.

It also appears the worry that the time gap in having an upgraded chiller available in three weeks versus waiting up to 12 weeks for the standard model must not have been as important as it was presented. If that timeline was that important and the current unit that close to expiring, then it would seem logical for the mayor to support the upgraded model.

Councilman Harris also commented before the vote how concerned he was for making sure City Hall workers had a good environment to work in and that the upgraded chiller was needed due to the time delay in getting the standard model. We should not risk shutting down City Hall. Then he turns around and votes against just the upgraded chiller with it shorter delivery date.

That’s a wrap for now. The Part II recap of the March 7th regular session will be along shortly.  Again, thanks to the many people that made calls and sent emails to council members on the million-dollar project. It was the largest response I have seen since I have been on the council. It MADE the difference in the final outcome.

I have always stated that if you and I work the issues together, we stand a much better chance of accomplishing our goals. This effort is another example of that joint effort in action with a positive result. Thank you for taking the time and making the effort to be involved in the government process and working with me.

Editor’s Note: This article contains the view points of Councilman Bill Summers and may not represent the views of the rest of the City Council, the City of Clarksville or ClarksvilleOnline.


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