The Budget and Finance Committee met Jan. 7 to talk to Trane representatives and ask for some clarification from the joint session meeting with Capital Outlay that happened this past December.
Trane USA is working with the county on an energy proposal package that would increase energy efficiency and save funds. Trane has been working with the county on the package since 2017.
Committee member Dwight Miller asked how the capital contribution, what the county pays to Trane, rolls into the savings according to the cash flow spreadsheet presented to the committee.
Trane General Sales Manager Owen Nevader, via phone a call, said it was how the cash flow model in the spreadsheet was designed and explained to the committee how the county could make the capital contribution.
Nevader said the county could theatrically make a one-off payment of $700,000, but the issue would be the county coming up with the money all at once. He said the other option for the county to pay is by making a yearly contribution to offset the negative cash flow, or loss of money.
Nevader showed one chart using $70,000 for 10 years that revealed even though there would be a negative cash flow for a few years, the model worked in favor for the county afterwards.
Nevader then showed what would happen if $100,000 was the contribution. He explained it would be like “taking money out of your left hand and putting it into your right hand,” because it would be overfunding it.
Nevader said the main difference between the two contributions was after 20 years, instead of returning $460,000 for contributing $70,000, the county will be getting $760,000 for contributing $100,000 for 10 years. There would still be some negative cash flow regardless.
Nevader said, depending on the repayment structure the county sets up, it would in the better interest for the county to pay the extra money. But, for the cleanest way to pay and offset the negative cash flow, would be by paying the interest rate of 2.5% - 3%.
Regardless of how the county pays the contribution amount, Nevader said the guarantee is based on energy savings yearly. If there is excessive savings, which Trane expects, then the excess money belongs to the county.
He said it is ultimately the county’s decision on how much they want to pay in contribution.
When discussing how financing would work, Director of Budget and Accounts Marianna Edinger showed what the payment schedule of 20 years would like with a 2.5% interest rate and it showed the county could make a down payment on the principal if they choose.
Coffee County Director of Maintenance Robert Gilliam explained to the committee the reason the contribution number options were $30,000, $70,000, and $100,000 were because the more money the county puts in, the shorter the payback time will be.
“I was looking down the road that the quicker we get that done, by the time these eight year old units turn of age we’ll ahead of the money enough that we can buy new units and put in and not back in the same situation we are in right now,” said Gilliam.
The committee hopes to have a decision made in March.
Kyle Murphy may be reached at email@example.com.