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Metro Newsroom

City Buildings to Receive $27 Million in Energy Improvements Without Upfront Cost

Tuesday September 24, 2013

Innovative partnership is one of the first in nation for a city government

Nearly $27 million in energy-efficient upgrades and repairs will be made to government buildings across Louisville, but the city won’t have to go into debt to pay for them, Mayor Greg Fischer announced today.

The city has signed an agreement with Johnson Controls, a global leader in building efficiency, to fund improvements that include replacing large pieces of outdated, inefficient equipment such as chillers and boilers. There will be upgraded lighting, insulation and wiring -- and the city will use solar power to heat water.

Johnson Controls, which employs 1,100 people in Jefferson County, will pay for the upfront cost of the upgrades. Metro Government, in turn, will make payments on the project through a performance contract, in which energy savings from the building improvements are guaranteed to pay for the work over 23 years. The energy savings will be measured before and after the improvements are completed.

If the energy savings are not realized as projected because of the work performed by Johnson Controls, the city will not be responsible for paying that portion of the project.

This is one of the most innovative partnerships between Johnson Controls and a city government in the United States, Fischer said.

Other governments and universities nationwide have used these contracts; but Louisville’s is the first in which Johnson Controls will fund the initial cost of the improvements for a city government. Johnson Controls worked in conjunction with Hannon Armstrong Sustainable Infrastructure Capital, Inc. (NYSE: HASI) to provide the underlying funding for the improvements.

“This unique approach is a great deal for taxpayers to make much-needed improvements to our many older buildings,” Fischer said. “In addition, this project will make our city government more sustainable and help us significantly cut carbon emissions.”

The upgrades to buildings — ranging from the Louisville Zoo to the police department — will save energy, reduce water use and cut carbon pollution while keeping the buildings comfortable, said Dave Peters, regional vice president of Johnson Controls.

“Across the nation many people talk about sustainability, but it takes forward thinking and the commitment of Mayor Fischer and his staff to make these programs a success,” Peters said. “You may not be able to see all of the updates we are planning, but they are already creating savings and reducing energy -- at no upfront cost to the city.”

According to projections, the project will:

  • Reduce yearly carbon emissions by more than 12,000 tons. That’s equivalent to the carbon impact of nearly 26,000 homes;
  • Create more than 500 local jobs and exceed the city’s targets for investment in businesses owned by minorities and women;
  • Result in $2 million in energy and operational savings year over year -- a savings that will continue once the payments to Johnson Controls are made in full.

Some of the planned improvements include:

  • New boilers and power systems for City Hall;
  • New chillers and electrical upgrades at the Youth Detention Center, new boilers at Metro Corrections
  • New boiler cooling tower at Public Health and Wellness;
  • New boilers and condensing units at the Southwest Government Center;
  • Numerous electrical and other upgrades at the Louisville Zoo;
  • New HVAC system at the Mary T. Meagher Aquatic Center.

The deal was more than a year in the making and was Fischer’s idea, after he returned from a U.S. Conference of Mayor’s meetings in which he learned about the innovative ways that governments were improving energy efficiency.

“City government could not afford, on its own, to pay for these upgrades,” Fischer said. “This unique public-private partnership shows what happens when people approach old problems with new ideas and new ways of thinking.”

This is the second major energy efficiency project with Johnson Controls. The city did a similar deal in 2010 -- however, in that case, the city has to issue debt upfront to cover the improvements.