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La Joya ISD school board approves roughly $20 million ‘energy savings’ contract

This article originally appeared in the Friday, June 28, 2019, issue of the Progress Times.

Without any meaningful public discussion, the La Joya school board Monday approved a plan to borrow millions for several major construction projects.

Performance Services Inc. approached the La Joya Independent School District with a proposal to borrow $32.5 million — and spend the money on heating, ventilation and air conditioning upgrades, radios, solar panels, security gates, artificial turf for two football fields and running tracks for 23 elementary schools, among other projects.

“We also secured a phenomenal financing package for the district as well,” said Jonathan Blackwell, a business development manager for the company.

At the last minute, though, the school board removed several projects from the proposal and reduced the amount to roughly $20 million.

Performance Services, which is headquartered in Indianapolis, provides clients with “Guaranteed Energy Savings” contracts.

In May 2017, the company persuaded the school board to buy LED lights and install new heating, ventilation and air conditioning systems.

The school district borrowed nearly $13 million for the project and must repay the money by 2033. With interest, the project will cost about $16.8 million.

Blackwell said that project will pay for itself through a combination of lower utility bills and operational costs.

“To date, since we’ve had substantial completion, we’ve been tracking the savings,” Blackwell said. “Just utility savings alone, the district is saving over $125,000 per month.”

Performance Services returned with a new proposal Monday.

Documents reviewed by the school board suggested the district buy a new radio system from Rio Comm LLC. Trustees would borrow $3.4 million at 2.49% interest and pay back the money within seven years. With interest, the radio system would cost nearly $3.8 million.

The district would borrow about $29.1 million for the remaining projects. Trustees reviewed two repayment plans: a 20-year plan with 3.62% interest and a 22-year plan with 3.69% interest.

Blackwell assured trustees they could afford the $32.5 million proposal.

“With this project, we’re not asking the district to contribute any capital. And the fact of that matter is that we were able to secure funding which would give La Joya ISD three years of deferred payments. Even capitalize interest,” Blackwell said. “So the district would not be out a single dime for any of the items that are part of this project. Nothing up front.”

Trustee Oscar “Coach” Salinas quickly motioned to approve the proposal, which the agenda listed as “Performance Services Contract Amendment.”

Basic questions about the proposal remained unanswered.

The board didn’t publicly discuss the exact amounts, the interest rates or the repayment schedule Monday. Trustees didn’t identify the individual campuses and district buildings scheduled for upgrades. And they didn’t explain why an “energy savings” contract included radios, security gates and running tracks.

Trustee Espie Ochoa said she wanted to hold a board workshop and discuss the proposal before making a decision.

Performance Services provided the board with about 200 pages of documents on June 20, just three days before the meeting, Ochoa said, adding that she had questions about the project.

“I’m not saying ‘No,’” Ochoa said. “I’m just saying ‘Let’s talk more about it.’”

After the discussion, attorney Ben Castillo met with the board in executive session. When the board returned, Salinas motioned to approve the contract with several caveats.

“I’ll go ahead and change my motion,” Salinas said. “As I said, I’ll so move on approving a new contract with Performance Services for ‘Phase 2 project’ subject to superintendent negotiating, not to include the elementary tracks, security fences and radios. Additionally, I also move to request the superintendent determine the best procurement option for the projects not included.”

After the board approved the project, Salinas motioned to approve the financial plan.

“I so move to approve financing as presented contingent on the inclusion of the security gates, tracks at the elementary schools and radios,” Salinas said.

The board approved the financial plan without any discussion.

Castillo, the attorney who represents the board, said the motion reduced the project cost to roughly $20 million.

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