Town seeks $1.6M state loan for utility projects

Town seeks $1.6M state loan for utility projects

Record-Journal

WESTERLY — The town will use up to $1.6 million in low interest loans from the state to reduce energy costs at Town Hall, the Police Station, and the Department of Public Works complex by converting to more efficient lighting and making other improvements. The loans will also finance a plan aimed at reducing the town’s spending on streetlights.

The state Infrastructure Bank Efficient Building Loan Fund, which is administered by the state Clean Water Protection Finance Agency, will provide the loans to pay for upgrades to the buildings as well as the installation of solar panels at the public works complex.

The town will give the loan fund a general obligation pledge and the bank will issue bonds and lend the proceeds to the town. The pledge serves as the security needed for the bonds. The Town Council unanimously approved the town’s participation in the loan program during its April 18 meeting.

CHA, an environmental engineering firm based in Albany, N.Y., performed energy audits of Town Hall and the police station. The company recommended installation of insulation in the attic at Town Hall, replacing the electric-powered water heater with a natural gas-fired unit, replacing motors that circulate hot water in the building, and replacing exterior and interior lighting with LED fixtures. The improvements are projected to reduce energy consumption by 13 percent.

The company also recommended improvements to the police station’s heating, ventilation, and air conditioning control system and replacing lighting in the building with LED fixtures. The new lighting is expected to reduce energy use by 15 percent. Opened in 2008, the police building is open at all times and uses the most energy of all municipal buildings.

Lights at the highway garage will be converted to LED fixtures, reducing electricity usage by a projected 65 percent. The installation of solar panels at the public works facility will result in additional savings, not specified in the report.

The bulk of the loan will cover the cost of purchasing streetlights and converting them to LED fixtures. The streetlight project is expected to produce the greatest savings, about $400,000 per year.

All of the projects will put the town position for financial incentives from National Grid, which will help pay for a portion of each project.

The town was designated as a potential loan recipient in a competitive process based on an application prepared by Amy Grzybowski, director of development services. The fund’s loans are designed to create savings over debt service by not exceeding the weighted average useful life of the projects that are being financed. Also, municipalities can choose to match the annual energy savings to the amount of debt service (principal and interest), so the loan would have a shorter term than the useful life of the equipment.

Another option available to municipalities is to spread out the repayments to match the useful life of the equipment, which would allow for annual cash savings greater than the amount of annual debt service and result in a positive cash flow to the municipality.

Municipalities are not required to pay interest during construction, so the first debt service payment will be in September 2017. “The benefit of this approach, is that Westerly will start to realize energy savings of the efficiency projects and from the solar project before having to repay the loan and will allow Westerly to match the savings with the loan repayment,” Grzybowski said.

Overall, Grzybowski said, “this project allows the town to move forward with several energy efficiency measures for the Town Hall, police station, and Department of Public Works.”

Town Manager Derrik M Kennedy called the energy savings initiatives “great projects.” “We know we’ll see significant savings,” Kennedy said.

dfaulkner@thewesterlysun.com


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