After more than two years of discussion and debate, the Mission City Council approved a contract with Performance Services Inc. on Monday to upgrade water meters and install LED lights.
The City Council voted 3-2 to approve the contract during a meeting on Monday afternoon.
Mayor Armando “Doc” O’caña, City Councilwoman Jessica Ortega and City Councilman Alberto “Beto” Vela voted to approve the contract with PSI. City Councilman Ruben Plata and City Councilwoman Norie Gonzalez Garza voted against the motion.
“I just want to make sure we have enough money to cover the liability,” Plata said, adding that he felt uncomfortable borrowing money based on the information provided by PSI.
The Indiana-based company approached Mission in August 2018 with a plan to borrow millions for energy-efficient projects. PSI promised the projects would pay for themselves — and pledged to cover the difference if they didn’t.
“We first met you about two-and-a-half years ago in mid-to-late 2018. We explained to you the benefits of Texas Government Code 302. And, essentially, that’s legislation that allows you to modernize your infrastructure. It provides a mechanism where you can transfer risk to the contractor — us — using savings to help fund the cost of the improvements,” said Jim Adams, the general manager for Performance Services of Texas. “Another big benefit is we can even provide financing, if you desire. So it helps you avoid the need for a voter referendum. So it’s kind of an all-inclusive opportunity to, again, modernize infrastructure, pay for it over time, using savings to help you make those payments.”
In June 2019, when the City Council held a workshop to review the proposal, PSI recommended that Mission borrow nearly $17.7 million to replace water meters, install LED lights and upgrade air conditioning systems in city buildings. The improvements would reduce energy costs and increase utility revenue, providing more than enough money for Mission to repay the debt, according to PSI.
The La Joya Independent School District and the Agua Special Utility District approved similar contracts with PSI, but members of the Mission City Council remained skeptical.
Mission eventually hired an independent engineer, Florida-based NV5, to evaluate the proposal. NV5 briefed the City Council on Monday.
“The costs, we feel, are reasonable and, in fact, a good deal for the city,” said Chris Halpin, the vice president of Energy Efficiency Services at NV5.
Installing LED lights would reduce energy costs by nearly $83,000 per year, according to the NV5 review. Replacing all residential and commercial water meters with new, more accurate technology would increase revenue by about $1.2 million per year.
NV5 also reviewed whether or not the deal made business sense for Mission.
“Typically we see between 30%, 40% and 50% markups, which include project management fees, construction management fees, engineering, plus their standard overhead and their standard profit,” said David Plis, an engineer with NV5. “We found that PSI was below market average. I believe they were around 30%. So that further enhances this project as an equitable deal for both you and PSI.”