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Board of Finance Vice Chairman Urges Yes Vote on Honeywell

Michael Manjos worked with Honeywell in negotiating a contract for energy efficiency projects for town schools.

To the Editor

I would like to clarify some details of the Honeywell agreement as some residents have some misconceptions of the Honeywell agreement, how it is reflected in the budget, and the value it brings to the Town and Schools of Monroe, CT.

  1. The Honeywell agreement IS included in the budget sent to the voters.  Let me explain. Honeywell and Monroe will enter into an Energy Performance contract.  The BOE had originally submitted a budget to the Town which included an energy spend of $1,544,560 (see accounts 5621-5626). Honeywell did a complete analysis of the districts energy spend and came up with an estimate of $1,321,523.  The BOF in meetings with Honeywell and the BOE reviewed these numbers and all parties agreed that the BOE utility budget could be lowered by $223,000.  This reduction was made by the BOF and is reflected in the BOE number sent to the voters.

      2.   Why don’t we see the line item change?

BOF does not have statutory authority to change line items in the BOE budget.  Once a final number is approved by the voters the BOE and only the BOE decides what line items to adjust.  We have been assured by the Superintendent and the Finance Director at the BOE that these line items will reflect the adjustment the BOF has made.

  1. How does Honeywell get paid?

The Honeywell contract gets paid for through an interest free loan from CL&P and through a 10 year tax exempt municipal lease all of which is completely funded by utility rebate dollars and guaranteed energy savings.  If the savings aren’t achieved then Honeywell has a contractual obligation to make up the shortfall. The BOE (after the BOF cut) will have an energy budget of $1,321,523. Honeywell has estimated that as a result of the work the new energy costs will be $910,234. This will give the BOE energy savings of $411,289.  These savings will go directly toward the payment of the tax exempt municipal lease. This lease will NOT require any additional tax levy whatsoever. 

  1. Rebates

Part of the Honeywell agreement includes securing rebates from the Utility companies totaling $655,417.  By doing multiple buildings at the same time Monroe qualified for a “comprehensive bonus” and currently signed agreements are in place with both Yankee Gas and CL&P reflecting this rebate amount.  This number reflects over 17% of the total contract cost and in addition to the guaranteed energy savings will fund the project in its entirety.  This will not cost the Monroe taxpayers anything beyond the current budget.  In securing these rebate dollars Honeywell had to go through an extensive review process with the Utilities around their calculations in order to get their savings numbers confirmed and approved.     

  1. Interest free loan

$400,000 of the project will be funded through an interest free loan from CL&P payable over 4 years which again will be paid for through the energy savings in the BOE budget.

  1. Lease

The balance of the project will be financed as a tax exempt municipal lease through Bank of America at a 1.66% rate over 10 years.  $520,000 of the lease will qualify for a PURA buy down which will save an estimated $29,580 in interest costs over this 10 year period.

  1. Security

In addition to the energy work, security improvements will be made to ALL the schools. This will include interior classroom locks and exterior door locks.  Honeywell is making a corporate donation of the interior locks and I would like to personally thank them for their generosity.

As many people are aware the original Honeywell plan was over 7 million dollars and after being reviewed by the BOF the decision was made to reduce the scope of the project and cut the term from 15 years to the current 10 years.  Savings were found by reducing the interest cost, increasing the percentage of rebates, and lowering the monitoring costs moving forward.

Many questions have been raised as to why we chose the scope we did and why did we leave out Monroe Elementary.   In order to try and reduce the scope to a level the BOF believed the voters would support we decided to try and maximize the return rate of the contract.  Since Monroe Elementary had already been converted to gas prior to Honeywell the cost/energy savings ratio was the lowest of all the buildings and it was left out of the current scope.  We did include Monroe Elementary in the security upgrades and it will be brought to the same standards as the other schools.  We also removed the town buildings from the scope and as such that the current scope only includes BOE buildings. 

Since all the buildings being upgraded are on the BOE side we made the decision to fund the contract thru the BOE budget.  If we did not fund the contract by this method the BOE would receive the savings and the town would receive the bill.  Under the current funding BOE will get equal savings and expenses and self fund the project with a net zero effect on their budget.

The Honeywell contract has been worked on for over a year.  We have tried to improve it every step of the way. In summation, the project is paid for in whole by utility rebates and Honeywell guaranteed energy savings — NOT through any increased tax burden!  It has been unanimously approved by the Town Council and the BOF and I hope you will support this project with a YES vote on April 23rd.

Please feel free to email any specific question to mmanjos@monroect.org and I will do my best to answer.

Sincerely

Michael A. Manjos

Vice-Chairman BOF

Donna Gail April 10, 2013 at 01:20 PM
Great explanation and summary. Thank you. We need more updates and communications like this, rather than the useless blatherings that come through from the First Selectman's office. For some reason, his emails as well as the Town web site are very hard to follow. To me, at least, it's much easier to read explanations like this on the Patch and as letters/articles in the Courier.
Alex April 10, 2013 at 01:36 PM
Good explanation Mr. Manjos. I think this should clear up any misconceptions.
Lifelong Resident? April 10, 2013 at 02:09 PM
I agree it is a very well written explanation. I also thank you for that. The contract would be paid by cost savings..how are we to be GUARANTEED those funds will go where you say they will. That is my concern.
Steve Kirsch April 10, 2013 at 03:11 PM
Mike, thank you for doing this. I hope that going forward this type of explaination can be used for other major projects or subjects on which there is public confusion.
Steve Kirsch April 10, 2013 at 03:17 PM
LR, what do you mean by "guaranteed"? The town/BOE has a legal obligation to pay the bonds and Honeywell has guaranteed the utility savings. The town/BOE has a yearly independent audit. At what point to we start trusting our elected officials to ensure that the process works correctly?
Bob Loblaw April 10, 2013 at 03:45 PM
IMO... The last paragraph should have been the first, but thank you for explaining it again.
Alex April 10, 2013 at 07:57 PM
This is a little off topic, but the BOE should write an article informing voters that there is a survey on the BOE site regarding the budget. They are taking suggestions on what should change which I think is a great way to get feedback. The town should also be doing something similar to this if not already. Great idea BOE! Here's a link to the survey if anyone is interested: https://www.surveymonkey.com/s/MonroeBOE_Budget2013
S.D. Bob Plissken April 10, 2013 at 08:46 PM
Did everyone see the Who Voted link? Check to see if your friends and neighbours voted http://www.scribd.com/doc/134920135/Who-Voted-04-02-2013
Rt25 April 11, 2013 at 12:02 PM
Unfortunately, there is no person on the town side up to developing, maintaining, and responding to such a survey.

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