Shining a light on city energy-saving project
March 14th, 2017
The public-private Infrastructure Trust was created a few years go to fund city projects using private monies so as not to burden taxpayers during these lean budget times.
Its first project was to retrofit more than 1,000 city buildings with energy savings equipment at a cost of some $200 million. When the Trust couldn’t raise that through private funding it pared down the project to 60 buildings.
In 2014, it took out a a $13.5 million loan from Bank of America (or $19 million taking into account interest over 14 years) to install $12.2 million worth of energy-efficiency upgrades. The improvements include a computerized system that will make monitoring the buildings more efficient, the city says.
All this information is on the Trust’s web site. Project Six, the nonprofit investigations group led by former city inspector general Faisal Khan, examined the loan agreements and questions the method of financing and cost of the work.
I talked to Khan’s team during its investigation and looked at its findings before it was published.
Documents show the energy-efficiency equipment installed was put up as collateral for the bank loan. That means, Project Six says, that if the Trust defaults on the loan, the bank could enter city buildings and repossess all the energy-saving equipment.
“The mayor put city property in hock without telling anyone, including City Council. Simply hoping that city property won’t get repossessed does not make this an acceptable setup. This is an irresponsible way to run any city program, especially one touted as ‘revolutionary’,” says Khan, who calls the costs wasteful.
City officials I talked to disagree, saying the financial records are public, that only 25 percent of the energy-efficiency equipment was put up as collateral and that improvements are already saving taxpayers.
“The energy savings are greater than promised and the people who use and manage these buildings are reporting noticeably improved conditions,” says Trust Executive Director Leslie Darling. “A project that modernizes Chicago’s existing assets, reduces Chicago’s carbon footprint, creates local jobs, and is paid for by re-allocating funds that used to go to pay utility bills should serve as a model for future projects.”
David Reynolds, who heads the city’s Department of Fleet and Facility Management, acknowledges the city usually issues bonds for building modernization projects, but in this case the department wanted to utilize the guaranteed energy savings associated with these capital improvements to finance them.
The city and Project Six each stand by their interpretation of documents in regard to whether all or part of the equipment was put up for collateral. Though Project Six offers a complete list of documents that appear to show all the equipment was put up for collateral.
The city says the point is energy savings were successful. It says it saw $960,000 in savings in 2015–10 percent more than the promised $860,000 in savings (2016 figures aren’t yet available).
On its web site, Project Six says work on Harold Washington Library shows “the clearest example of waste” when it replaced 10,000 light bulbs at a cost of $650,622–that’s about $65 per light bulb (5,092 are fluorescent bulbs that retail for about $8).
The city says there’s a reason for the $65 price tag. The other bulbs are pricier metal halide bulbs that also serve as the heating source for the library–it’s what makes the building so unusual. The price tag also includes labor (or the cost of screwing them in).
This story has been updated to give more specific numbers about the light bulbs in Harold Washington Library.