Opinion: Current Decisions Impact the Long-term Welfare of City Finances

by Jon Grimm, Third Ward Councilman
February 17, 2010

Currently there is an issue before City Council that is causing some debate. I’d like to take this opportunity to detail my views because I believe that the impact on the city’s future financial situation could be significant.

One of the first actions taken in the new term of City Council was to choose an HVAC system for the Municipal Court. As a tool to aid us in that decision, we commissioned an energy model that compared five different systems to determine an overall life cycle cost. In the meeting in which the final decision was made, the city engineer pointed out that he had some minor concerns with the results of the model but that he had made some adjustments to compensate for his concerns. Using the adjusted report, the City Engineer recommended the Packaged Roof Top, Variable Air Volume system (VAV) using electric resistance heat as the system with the lowest life cycle cost. Based on the city Engineer’s recommendation, City Council elected to proceed with the VAV system.

A few weeks later a constituent questioned the energy costs represented in the report that we used to make our decision. As a result of that conversation, I looked back at the report and consulted local HVAC expert David Haas of Morrison Inc. to see if these concerns had merit. After a basic review of the report, Mr. Haas indicated that, in his opinion, the energy costs for heating and cooling were grossly understated. Further it was his opinion that the error would significantly change the life cycle cost and therefore our decision. Given this information, I felt it was prudent to re-examine our decision and brought it back to Council for further discussion.
As design for the Municipal Court is in its final stages I felt that time was of the essence, so I called a meeting of a Committee-of-the-Whole to bring these concerns to light. Discussions in the meeting surrounded the question of the heating cost represented for the chosen VAV system. It was determined that there was enough uncertainty to ask the firm who generated the report of clarify their results so that the difference in energy cost numbers could be reconciled.
In a follow-up meeting, we received what amounted to a defense of the report rather that a justification of its numbers. It was asserted that the costs had to be correct because the model used was very sophisticated and the disputes were just “rule of thumb” calculations. Some in the meeting wanted to simply continue with the VAV system, blindly accepting the report. They contend the much lower initial cost of the VAV system overrides it’s much more expensive operating costs.

I’d like to put in perspective my hesitance to blindly move forward without justification of the energy cost. The report in question contends the heating and cooling cost to be approximately $10,000 while Mr. Haas’ estimate is closer to $30,000. This difference is significant because, after simple payback, it represents a waste of hundreds of thousands of dollars over the life of the system. I am not alone in my concerns. There have been concerns expressed as far back as September by not only manufacturers but also the city engineer and the engineering firm we contracted to do an energy study for our city buildings including the former OBES building.
I believe it would be short sighted to overlook the high operating cost of the VAV system in favor of the short term benefit of a low initial cost, particularly given the fact that the operating cost will come directly from an already belabored General Fund. This is not the action we should take if we are truly concerned about the health of our General Fund.