Jessica Cejnar Andrews / Tuesday, Aug. 16 @ 6:06 p.m. / Local Government
City Council Gives Johnson Controls One More Chance On Pool Project, Puts Water Meters On Back Burner
Crescent City Councilors were reluctant to continue working with Johnson Controls, especially after learning that the cost for a water meter project was roughly $4 million more than initially anticipated.
But they directed staff to spend the next two weeks to work out a contract that sets clear parameters for energy efficiency upgrades at the Fred Endert Municipal Pool, another project the Medford-based company was expected to perform.
Still, Councilors told City Manager Eric Wier that if both parties couldn’t reach an agreement by their next meeting, the city would have to move on. They put the water meter project on hold for now.
“That’s not even on my plate right now,” Mayor Jason Greenough told the City Manager.
The two projects were the product of an energy efficiency audit Johnson Controls conducted of city facilities in early 2021. The company was tasked with upgrading the propane boiler, HVAC system and heat pump at the Fred Endert Municipal Pool as well as replacing its aging water meters with a system that could read the meters remotely.
Johnson Controls was also expected to install solar panels at the pool in addition to a more efficient heat pump, but it wasn’t a viable option, Wier told Councilors on Monday. The company instead proposed to replace the pool’s boiler system with new boilers and install a dehumidification system that would extend the life of the building and provide a better environment for patrons at an initial cost of $1.1 million.
Measure S tax dollars and funds from the American Rescue Plan Act was to have fund the pool project, Wier said. Both the City Council and the Measure S Oversight Committee in March wanted the city to move forward with the construction, but Wier later found out during contract negotiations that Johnson Controls wasn’t willing to separate the pool and water meter projects.
However on Monday, Wier said he received an email from the company’s general manager, Russell Garcia, that they may be willing to look at the pool project again on its own merits.
“He said he could not guarantee that $1.187 million price that’s in the staff report though,” Wier told Councilors.
During this time period, Johnson Controls also told Councilors that replacing the water meters would cost about $2 million plus a 20 percent contingency. However, once they got into the design phase, the company determined the project would actually cost $4.75 million, Wier said.
“The terms of the project agreement were if they could that and deliver a project for that price, then the city either needed to move forward with it or if the city chose not to then we would need to pay their engineering fees,” Wier told Councilors. “Because of escalation and because of a bunch of different things, obviously they didn’t meet the terms of that project agreement, so we’re not held to paying their engineering fees.”
However, Wier said staff was trying to find a way to move forward with the project since the city’s meter reader was having to manually read about 50,000 water meters annually.
But after consulting with Urban Futures, the city’s financial consultant on the project, city staff determined there were incorrect assumptions in the Johnson Controls water metering project and the cost jumped from $4.75 million to about $5 million.
That price increased further to $5.6 million after figuring out the number of meter boxes that had to be replaced along with the concrete and other materials that went along with that project, Wier said.
“This is at the very very far end of what we can achieve from a financing side of it even if it’s possible at all. It would extremely stretch our ability and that doesn’t even include any contingent,” he told Councilors. “In looking at a project like this, I feel strongly that we need to have a contingency. Ten percent on something like this is about the minimum I would be comfortable recommending to the Council. That brings your project cost to approximately $6.2 million. Again, stretching us to the point of not being able to do this.”
Wier also noted that the city has other necessary projects in its water system it has to find financing for, including a $7-8 million installation of a redundant transmission main off Kings Valley Road. Six million dollars for the water metering system would max out the city’s debt capacity, he said.
According to Wier, Johnson Controls had worked for about three years to bring the two projects before City Councilors.
Garcia said Johnson Controls is out of pocket about $200,000 due to staff time spent on the city's projects.
“We haven’t asked for a dollar from the city,” he said. “We’re trying to bring value of bringing real costs and real time to you so you can make good sound business decisions.”
Crescent City Mayor Jason Greenough pointed out that he and his colleagues were ready to sign off on the pool project about five months ago at a guaranteed price of $1.17 million, but it was delayed. He said he was willing to hear from Johnson Controls, but he felt like the city wasted its time.
Greenough also pointed out that the city had already figured out how to budget for the pool project.
Inscore, while he acknowledged that Johnson Controls also put staff time into vetting the two projects, said ensuring the city has the ability to finance crucial projects like the redundant water main was more important than replacing its water meters. Inscore also supported moving forward on the pool project, but not if it’s “one penny more” than the $1,186,391 price given in the city’s staff report Monday.
“If Johnson Controls said tonight we will honor $1,186,391 — and that includes contingency — then I would vote yes let’s move forward on the pool project,” he said. “At some point in time, you have to draw a line and then you have to say we have to put our time and energy into something else.”
Speaking for Johnson Controls, Garcia said he was sympathetic to the Council’s decision regarding the water meter project, but said they felt the pool project “is in grasp here.” However, he said he has to refine those costs to see he could bring it back to the originally-budgeted amount of $1.17 million.