Call to Order and Roll Call
The 2nd meeting of the Capital Planning Advisory Board was held on Friday, August 27, 2010, at 10:30 AM, in the Pogue Library at Murray State University in Murray, Kentucky. Representative Melvin B. Henley, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Jack Westwood, Co-Chair; Representative Melvin B. Henley, Co-Chair; Representative Ron Crimm, Charles Byers, Laurie Dudgeon, John Hicks, and Bill Hintze.
Guests testifying before the Board: Dr. Randy Dunn, President; Mr. Thomas W. Denton, CPA, Vice President of Finance and Administrative Services; and Mr. Kim Oatman, Chief Facilities Officer, Murray State University (MuSU); Dr. Gary Ransdell, President; Mr. John Osborne, Vice President of Campus Services and Facilities; Mr. Dale Dyer, Manager of Plant Operations; Ms. Christian Ryan-Downing, Sustainability Coordinator; and Mr. Charlie Jones, Director for Facilities Management, Western Kentucky University (WKU); and Mr. Paul Kaplan, Senior Advisor and Director, Green Bank of Kentucky Program, Finance and Administration Cabinet.
LRC Staff: Shawn Bowen, Jennifer Luttrell, and Don Mullis.
Approval of Minutes June 10, 2010
Chairman Hensley noted that there was not a quorum; therefore the minutes of the June 10, 2010, meeting would be approved at the October meeting.
Discussion of Murray State University Capital Projects
Dr. Dunn discussed MuSU’s top capital project requests. He noted that the university’s top three General Fund project requests for 2010-2012 included the Construct New Science Complex project (final phase), $30.1 million; the Construct New University Library project, $58 million; and the Upgrade Campus Electrical Distribution System project, $11.1 million. The new Science Complex project would include a 72,500 SF Engineering-Physics Building, as well as teaching and research space. The New University Library project would include a 168,500 SF facility, in addition to the existing library facilities of Pogue and Waterfield. The existing facilities are among the top 10 worst facilities in the Facility Condition Assessment and Space Study completed in February 2007 by Vanderweil Facility Advisors Inc. (VFA). This study was commissioned by the Council on Postsecondary Education in 2007 to assess the condition of certain university facilities. The third project, the Upgrade Campus Electrical Distribution System project, was authorized in the 2010-2012 budget ($11.1 million restricted funds), and includes upgrades to electrical substations, and replacement of switches, cable, and related equipment.
Dr. Dunn reported that the university’s main non-General Fund capital project is the Construct Paducah Regional Campus Facility project. Authorized in the 2010-2012 budget for $17.7 million, this project will be financed with third party financing. The scope of work includes construction of a 50,000 square foot regional campus facility, including classrooms, offices, and computer labs. The facility is needed because the academic programs in Paducah have outgrown the existing leased space at the Crisp Center.
The university has completed two agency bond projects authorized in the 2008-2010 budget: the James Richmond residential facility ($15 million) and various projects utilizing Capital Renewal Housing and Dining Pool funds ($7.6 million). The James Richmond residential facility is a 79,000 SF facility that was completed in fall 2009; it has 279 beds and will replace Richmond Hall. Capital Renewal Housing and Dining Pool projects entail replacement of various facility systems that have exceeded at least 90% of their useful life. For 2010-2012 the university’s top agency bond priorities are the Renovate Elizabeth Hall project ($8.9 million), the Renovate College Courts project ($10 million), and the Renovate Curris Center T'Room and Food Service Equipment project ($1.01 million).
Dr. Dunn then discussed the Construct Electrical Generation Plant project. This project was initially authorized in the 2008-2010 budget and reauthorized in the 2010-2012 budget. It is funded through utility and other energy savings measures. The project calls for the university to enter into a tri-party agreement with Murray Electric and the Tennessee Valley Authority (TVA) to construct an electrical generation plant on campus. The 2 megawatt electric generator will be utilized during crisis situations and will provide enough power to fully operate all electrical systems in the dormitories, one cafeteria, and the Wellness Center.
In response to a question from Mr. Hintze, Dr. Dunn responded that they are expecting 10,200 to 10,300 students to enroll this fall.
In response to a question from Representative Crimm, Dr. Dunn said the MuSU Office of Emergency Management is set up to alert students and faculty of any emergency and the voice alert can be heard campus wide. Mr. Oatman said the voice alert can be heard inside and outside. Co-Chair Henley added that MuSU was crucial to the city of Murray in reporting bulletins over the radio stations during the ice storm last winter.
In response to a question from Mr. Hicks, Mr. Oatman responded that with the age of the electrical distribution system, the campus is at high risk in that the school may have to shut down buildings. The new system is designed to last 50 years.
In response to a question from Co-Chair Henley, Mr. Oatman said Murray is subscribing to a TVA program which allows the customer to earn credits by shedding electrical load during periods of peak electrical demand. The credits from subscribing to this program depend on the amount of load agreed to be shed and are projected to be over $300,000 annually. The school also has contracts with the city of Murray for diesel fuel and natural gas at the most efficient rates possible.
Presentation on Western Kentucky University Capital Projects
Dr. Ransdell addressed the Board and thanked members for the opportunity to discuss campus sustainability. He then introduced other WKU staff in attendance: Mr. John Osborne, Vice President of Campus Services and Facilities; Mr. Dale Dyer, Manager of Plant Operations; Ms. Christian Ryan-Downing Sustainability Coordinator; and Mr. Charlie Jones, Director for Facilities Management.
Mr. Osborne said WKU’s Energy Policy was created by a committee of staff, faculty, and students, and adopted in March 2009. He said the overall purpose of the policy is to promote energy efficiency and conservation on campus by implementing strategies that will reduce the consumption of energy. Dr. Ransdell added that this will not only save energy and money, but that careful management of energy use can also benefit the environment and extend the life of equipment.
Mr. Dyer and Ms. Ryan-Downing discussed a recent Energy Savings Performance Contract (ESPC) implemented by WKU. The ESPC is expected to save the school over $1 million annually on its utility bills, with a total projected savings of $15,267,306 over a 15-year period. The contractor is Johnson Controls and the project will cost $9.7 million, to be financed through a tax-exempt lease at an interest rate of 5.10%. Energy savings measures include installation of energy efficient lighting, upgrade or replacement to water fixtures, mechanical improvements, and installation of an 80-panel solar heating system on the Preston Center roof. This project will create or impact over 200 jobs.
Ms. Ryan-Downing said the university has installed 2,114 water saving fixtures and rainwater collectors on the roofs of the barns and parking garages. The water is then collected in a 550-gallon cistern and used to water the gardens. The ESPC improvements will reduce the school’s annual greenhouse gas emissions by 21,487 metric tons. The new natural gas boiler installed in 2009 in the Central Steam Plant reduced CO2 emissions 12%. Students are also actively involved in various conservation competitions or programs.
In response to a question from Mr. Hicks about the school’s efforts to reduce paper usage, Ms. Ryan-Downing stated that the school is trying to reduce its paper usage by centralizing printing, but this effort is in the investigative stage currently. Dr. Ransdell added that the school has gone to paperless billing and paperless paychecks.
Presentation on the Green Bank of Kentucky Program
Mr. Kaplan next discussed the Green Bank of Kentucky. The mission of the Green Bank is to promote energy efficiency, reduce operating costs and energy use, protect the environment, save taxpayer dollars, promote economic development, and create “green” jobs. Less than three months after the program began, the Green Bank made its first loan of $1.3 million to the Kentucky Department of Education (KDE). KDE used the loan to retrofit the Kentucky School for the Blind and two other facilities. This loan enabled KDE to realize operating savings of nearly $140,000 a year, an annual combined reduction of carbon emissions equivalent to 1,383 tons of CO2, and a total savings over the life of the project of almost $2.15 million. The savings generated through reduced operating costs and energy usage pay back Green Bank loans. Green Bank funds are then recycled into new loans.
Loans approved by the Green Bank Loan Committee currently carry a fixed rate of 3.25% and a maximum term of 14 years. There are three Green Bank Revolving Loan Programs. The first is the eSELF Revolving Loan Program, which allows state agencies to self-perform energy efficiency projects costing between $50,000 and $225,000. The goal for the eSELF program is a 20% reduction in energy consumption. The second is the Hybrid Revolving Loan Program, which allows funding for energy projects in state buildings that cost between $50,000 and $600,000. An energy audit or engineering analysis is required along with a completed design and development package. State agencies procure labor and materials. The third is the ESPC Revolving Loan Program, which funds energy efficiency projects typically costing more than $600,000. These projects use investment-grade energy audits to provide a detailed cost benefit analysis of energy efficiency investments. These projects also use a life cycle cost analysis. ESPC loans also require a guarantee by an energy savings performance company.
The Green Bank is also procuring and implementing an energy management software solution for Kentucky, which will track energy usage by building, audit utility bills, identify buildings that are energy hogs, and help determine what energy efficiencies and upgrades are necessary in each building. It will interface with the accounting system to potentially pay utility bills electronically, and will also interface with the Commonwealth’s capital projects and capital management software to automatically generate maintenance and repair work orders. The software will also be used to help measure and verify energy savings.
A group of 17 state buildings with 1.9 million square feet has been tentatively identified as a pilot program. The pilot buildings were selected to provide a representative mix of different uses, ages, and types of buildings. The initial discovery phase of the pilot program will begin soon, and the data base and software platform are scheduled to be operational in early 2011. Kentucky is only the second state to procure and implement an energy management software system. It is anticipated that this enterprise platform will enable the Finance Cabinet to track energy usage in the state’s public buildings and eventually save the Commonwealth tens of millions of dollars a year.
In response to a question from Mr. Hicks about funding for the Green Bank, Mr. Kaplan stated that the bank started with a balance of $14 million, and now has approximately $10 million available for loans. The program is funded through federal stimulus dollars and subsidies through the American Recovery and Reinvestment Act. Three loans have been closed to date. Mr. Hintze commented that the Capital Planning Advisory Board has been in support of a program such as this since the mid 1990s.
Schedule of Future Meetings
Co-Chair Henley said the next meeting will be held at the Kentucky State University Center for Sustainability of Agriculture in Frankfort, Kentucky at 10:00 a.m. on October 29, 2010.
Adjournment
With there being no further business to discuss, the meeting was adjourned at 12:04 PM.