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21 FEB 25 CITY OF JACKSONVILLE RESCHEDULED CITY COUNCIL MEETING FEBRUARY 25, 2021 6:00 P.M. – 7:54 P.M. REGULAR CITY COUNCIL MEETING - CITY HALL - #1 MUNICIPAL DRIVE The City Council of the City of Jacksonville, Arkansas met in a rescheduled session on February 25, 2021 at the regular meeting place of the City Council. Council Member Bolden delivered the invocation and Mayor Johnson led a standing audience in the “Pledge of Allegiance” to the flag. ROLL CALL: City Council Members: Dietz, Bolden, Blevins, Sansing, Ray, Mashburn, Traylor, Twitty, Smith and Rains answered ROLL CALL. Mayor Johnson also answered ROLL CALL declaring a quorum. PRESENT TEN (10) ABSENT (0). Others present for the meeting by Zoom were: City Attorney Stephanie Friedman, Fire Chief Alan Laughy, Police Chief Brett Hibbs, Parks and Recreation Director Kevin House, Parks and Recreation Marketing Manager Marlo Jackson, Theresa Watson. Other present in the audience were: Rick Kron, Finance Director Cheryl Erkel, Human Resource Director Charlette Nelson. PRESENTATION OF MINUTES: Mayor Johnson presented the minutes of the regular City Council meeting of December 17, 2020 for approval and/or correction. APPROVAL AND/OR CORRECTION OF MINUTES: Council Member Bolden moved, seconded by Council Member Traylor that the minutes of the regularly scheduled City Council meeting of 17 December 2020 be APPROVED. MOTION CARRIED. CONSENT AGENDA: REGULAR MONTHLY REPORT/FIRE DEPARTMENT Council Member Ray moved, seconded by Council Member Traylor to approve the regular monthly report for December 2020 from the Jacksonville Fire Department, reflecting a fire loss of $45,000.00 and a savings total of $369,000.00. Council Member Ray moved, seconded by Council Member Traylor to approve the regular monthly report for January 2021 from the Jacksonville Fire Department, reflecting a fire loss of $36,200.00 and a savings total of $178,800.00. REGULAR MONTHLY REPORT/POLICE DEPARTMENT Council Member Ray moved, seconded by Council Member Traylor to approve the Regular Monthly Report for January 2021 regarding annual crime statistical comparisons. REGULAR MONTHLY REPORT/CODE ENFORCEMENT Councilman Ray moved, seconded by Councilman Traylor to approve the regular monthly report as presented for January 2021. Assigned Calls 23 Self-Initiated Calls 74 1 CITY OF JACKSONVILLE RESCHEDULED CITY COUNCIL MEETING FEBRUARY 25, 2021 6:00 P.M. – 7:54 P.M. Follow ups 83 Structures Inspected 0 Meetings/Court Hearings 0 Rentals Inspected 0 Warnings Issued 0 Properties Red Tagged 0 Tickets Issued 3 Search Warrants Served 3 3-Day Notice 84 Structures Rehabbed 0 7-Day Notice 11 Structures Condemned 0 Vehicles Tagged 15 Houses Demolished by City 0 Vehicles Towed 6 Houses Demolished by Owner 0 Lots posted 0 Parking Violations 0 Signs removed 0 Grass Letters 0 Trash cans tagged 42 Grass Mowed 0 Basketball Goals 2 REGULAR MONTHLY REPORT/ENGINEERING DEPARTMENT Council Member Ray moved, seconded by Council Member Traylor to approve the regular monthly report for January 2021. PERMITS/LICENSE ISSUED INSPECTIONS PERFORMED Building Permits 9 Building Inspections 22 Business Licenses Electrical 30 Plumbing 28 HVACR 19 REGULAR MONTHLY REPORT/ANIMAL CONTROL Council Member Ray moved, seconded by Council Member Traylor to approve the regular monthly report for January 2021. ADOPTION FEES/FINES $ 450.00 CONTRIBUTIONS 0.00 TOTALS $ 450.00 ROLL CALL: Council Member: Dietz, Bolden, Blevins, Sansing, Ray, Mashburn, Traylor, Twitty, Smith, and Rains voted AYE. MOTION CARRIED. WATER DEPARTMENT: WASTEWATER DEPARTMENTS: FIRE DEPARTMENT: POLICE DEPARTMENT: STREET DEPARTMENT: SANITATION DEPARTMENT: PARKS & RECREATION: PLANNING COMMISSION: ORDINANCE 1654 (#04-2021) AN ORDINANCE RECLASSIFYING PROPERTY IN THE CITY OF JACKSONVILLE, ARKANSAS; AMENDING ORDINANCE NOS. 213 AND 238 AND THE LAND USE MAP OF THE CITY OF JACKSONVILLE, ARKANSAS; DECLARING AN EMERGENCY; AND FOR OTHER PURPOSES. {GENERAL LOCATION: 4900 & 4800 T.P. WHITE DRIVE} 2 CITY OF JACKSONVILLE RESCHEDULED CITY COUNCIL MEETING FEBRUARY 25, 2021 6:00 P.M. – 7:54 P.M. Council Member Ray moved, seconded by Council Member Bolden to place Ordinance 1654 on FIRST READING. ROLL CALL: Council Member Dietz, Bolden, Blevins, Sansing, Ray, Mashburn, Traylor, Twitty, Smith, and Rains voted AYE. (0) voted NAY. MOTION CARRIED. Whereupon City Attorney Friedman read the heading of Ordinance 1654. Council Member Ray moved, seconded by Council Member Bolden to approve Ordinance 1654 on FIRST READING and SUSPEND THE RULES to place Ordinance 1654 on SECOND READING. ROLL CALL: Council Member Dietz, Bolden, Blevins, Sansing, Ray, Mashburn, Traylor, Twitty, and Smith voted AYE. (0) Council Member Rains voted NAY. MOTION CARRIED. Council Member Ray moved, seconded by Council Member Bolden to further SUSPEND THE RULES and place Ordinance 1654 on THIRD AND FINAL READING. ROLL CALL: Council Member Dietz, Bolden, Blevins, Sansing, Ray, Mashburn, Traylor, Twitty, Smith, and Rains voted AYE. MOTION CARRIED. Council Member Ray moved, seconded by Council Member Bolden to APPROVE AND ADOPT Ordinance 1654 in its entirety. ROLL CALL: Council Member Dietz, Bolden, Blevins, Sansing, Ray, Mashburn, Traylor, Twitty, Smith, and Rains voted AYE. MOTION CARRIED. Council Member Ray moved, seconded by Council Member Bolden that the EMERGENCY CLAUSE be approved and adopted. ROLL CALL: Council Member Dietz, Bolden, Blevins, Sansing, Ray, Mashburn, Traylor, Twitty, Smith, and Rains voted AYE. MOTION CARRIED. th ORDINANCE 1654 (#04-2021) APPROVED AND ADOPTED THIS 25 DAY OF FEBRUARY, 2021. COMMITTEE(S): Used Car Lot Committee (Council Member Mashburn) No report submitted. GENERAL: a. PRESENTATION for Black History Month honoring Reverend and Mrs. McGhee Council Member Bolden stated that in honor of Black History Month it is very important that we recognize the African Americans in our great City who have helped to forge an impact the Community, to change courses and help people believe that they are successful no matter what. He stated that tonight we are going to honor Reverend Kenneth McGhee and his wife, Mrs. Marlene Jones McGhee. He noted that they are present by Zoom. He read the plaque for Reverend McGhee: “The seal of Jacksonville presented to Reverend Kenneth McGhee in honor of Black History Month. We recognize you as being a builder in this great City of Jacksonville. Building many facilities in our Community. Thank you for over 40 years of dedicated service.” 3 CITY OF JACKSONVILLE RESCHEDULED CITY COUNCIL MEETING FEBRUARY 25, 2021 6:00 P.M. – 7:54 P.M. He then read the plaque for Mrs. Marlene Jones McGhee: “In honor of Black History Month; we recognize you as making an impact in many areas of our City. Thank you for your dedicated service.” Noting Mrs. McGhee’s own quote on the plaque which reads “Let each esteem other better than themselves.” He thanked them both for all they do. The City Council joined in applause for Reverend and Mrs. McGhee. Mrs. McGhee thanked the City Council for their recognition. She stated that she loves God and his people, saying that she is surprised and grateful for the recognition. She stated that she would like to thank everyone on behalf of her husband who no longer speaks. She thanked everyone for allowing her to join forces and make a difference in the Jacksonville area. She stated that she was not born in Jacksonville but married a wonderful man who brought her to Jacksonville and they raised their children in Jacksonville and have grandchildren attending school in Jacksonville. She stated that this is a great honor, thanking everyone. b. INTRODUCTION of Justice of the Peace Kristina Gulley of District 10 Kristina Gulley introduced herself as the newly elected Justice of the Peach for District 10, which consist of North Little Rock and parts of Jacksonville. She stated that she looks forward to working with some of the members soon. She noted that she has already spoken with several of the members and wants to make herself available. She offered her phone number and email address for those wishing to contact her. She then noted that recently she started hosting virtual meetings and will continue those periodically. She explained that she is bringing forth guest speakers who can inform about resources for the Community during this time of the pandemic. Council Member Mashburn welcomed her and expressed her support. Other members joined in expressing their support. Blade and Barrel Mayor Johnson related that Blade and Barrel is almost ready to open their doors, barring anything unforeseen. He read from a statement: “we are th expected to start a soft opening no later than March 9 and open to the th public March 11.” c. ORDINANCE 1653 (#03-2021) AN ORDINANCE AMENDING PROCEDURE AND FORM OF REGULAR CITY COUNCIL MEETINGS FOR THE CITY OF JACKSONVILLE, ARKANSAS; AMENDING ORDINANCE NUMBERS 132 AND 532, SPECIFICALLY CODIFIED AS JACKSONVILLE MUNICIPAL CODE SECTIONS 2.04.010 AND 2.04.020; DECLARING AN EMERGENCY; AND FOR OTHER PURPOSES. 4 CITY OF JACKSONVILLE RESCHEDULED CITY COUNCIL MEETING FEBRUARY 25, 2021 6:00 P.M. – 7:54 P.M. Council Member Bolden moved, seconded by Council Member Ray to place Ordinance 1653 on FIRST READING. ROLL CALL: Council Member Dietz, Bolden, Blevins, Sansing, Ray, Mashburn, Traylor, Twitty, Smith, and Rains voted AYE. (0) voted NAY. MOTION CARRIED. Whereupon City Attorney Friedman read the heading of Ordinance 1653. Mayor Johnson stated that we will follow Robert’s Rules of Order, adding that if a Council Member wants to turn something in they have to do it by noon Friday before the regular scheduled meeting. Council Member Rains stated that section two is actually covered in section one of Ordinance 1606. City Attorney Friedman concurred, saying parts of, noting that it is being amended. She stated that 1606 was not expressly identified but section three states ordinances in conflict are hereby replaced covers that. Council Member Ray moved, seconded by Council Member Bolden to approve Ordinance 1653 on FIRST READING and SUSPEND THE RULES to place Ordinance 1653 on SECOND READING. ROLL CALL: Council Member Dietz, Bolden, Blevins, Sansing, Ray, Mashburn, Traylor, Twitty, Smith, and Rains voted AYE. (0) voted NAY. MOTION CARRIED. Council Member Ray moved, seconded by Council Member Bolden to further SUSPEND THE RULES and place Ordinance 1653 on THIRD AND FINAL READING. ROLL CALL: Council Member Dietz, Bolden, Blevins, Sansing, Ray, Mashburn, Traylor, Twitty, Smith, and Rains voted AYE. MOTION CARRIED. Council Member Ray moved, seconded by Council Member Bolden to APPROVE AND ADOPT Ordinance 1653 in its entirety. ROLL CALL: Council Member Dietz, Bolden, Blevins, Sansing, Ray, Mashburn, Traylor, Twitty, Smith, and Rains voted AYE. MOTION CARRIED. Council Member Ray moved, seconded by Council Member Bolden that the EMERGENCY CLAUSE be approved and adopted. ROLL CALL: Council Member Dietz, Bolden, Blevins, Sansing, Ray, Mashburn, Traylor, Twitty, Smith, and Rains voted AYE. MOTION CARRIED. th ORDINANCE 1653 (#03-2021) APPROVED AND ADOPTED THIS 25 DAY OF FEBRUARY, 2021. d. RESOLUTION 803 (#01-2021) A RESOLUTION APPROVING AND GRANTING AUTHORIZATION TO MAYOR JOHNSON AND OTHER OFFICIALS FOR ENTER INTO A PROJECT DEVELOPMENT AGREEMENT WITH JOHNSON CONTROLS INC.; AND, FOR OTHER PURPOSES. 5 CITY OF JACKSONVILLE RESCHEDULED CITY COUNCIL MEETING FEBRUARY 25, 2021 6:00 P.M. – 7:54 P.M. Council Member Ray moved, seconded by Bolden to read Resolution 803. MOTION CARRIED. Whereupon City Attorney Friedman read the heading of Resolution 803 (#01-2021). Mr. Alex Ray, Director of Business Development in Arkansas for Johnson Controls, specifically their performance infrastructure division, offered that Johnson Controls is a large corporation based out of Milwaukee, Wisconsin operating since 1885 and in Little Rock since 1906. He related that most people familiar with Johnson Controls are familiar with their brands used in the commercial building space. He said they use York Air Conditioning, Simplex Grinnell Fire and Security, and Tyco Security are all brands of Johnson Controls. He stated that his division is specifically focused on Public Sector Infrastructure, working with cities and counties, school districts and state agencies, as well as colleges and universities across the State. He explained that they are specifically focused on identifying ways that they can utilized any number of procurement models that the legislature has made available to fund capital improvements, facility improvements, deferred maintenance upgrades, capital equipment upgrades with the primary focus on doing it by reducing the costs the cost of operating the business. Driving energy efficiency, driving operational efficiency and then leveraging those costs savings to fund much needed deferred maintenance and capital improvement in the city’s facilities. He stated that Mayor Johnson is familiar with their work and the concept having done it when he was at the Quorum Court, Pulaski County. He stated that he approached the Mayor at least a year and a half ago and talked to him about the opportunities that we might serve the City of Jacksonville. He agreed to do an analysis to find out if there is an opportunity whereby the City of Jacksonville could utilize a performance contract to fund needs out of the Capital Improvement budget and reduce the operating costs of the City. He pointed out that one of the alternative procurement vehicles that the legislature has made available to municipal government is a procurement model called performance contracting. It is a model where the City of Jacksonville partners with firm like Johnson Controls and we bear the risk and burden of helping the City drive down the energy costs, and drive down the operating costs and then use those costs savings to fund the project. He stated that the idea is that a performance contract is budget neutral, by law and by design it is a cash flow neutral budget neutral procurement model, where we implement a project that reduces energy costs, operational costs from existing appropriations and then we leverage those savings to fund the project. He added that ideally, the project pays for itself, it is self-funded by the savings. In Arkansas particularly, we call it guaranteed performance contracting because per Arkansas Statute, if Johnson Controls commits to the City of Jacksonville that through this process that you will save X number of dollars, then Johnson Controls is contractually obligated to the City that you realize those savings. Any shortfall in a project is made up by Johnson Controls. If I tell the City you are going to save $100,000.00 annually and year one you only save $70,000.00 then Johnson Controls will give the City of Jacksonville a shortfall check for $30,000.00. Under Arkansas law, it is called guaranteed performance contracting. He stated that this has been used 6 CITY OF JACKSONVILLE RESCHEDULED CITY COUNCIL MEETING FEBRUARY 25, 2021 6:00 P.M. – 7:54 P.M. extensively around state government. He offered a brief history of how the law came to be used by a variety of government and state agencies. He stated that it is an opportunity to reduce costs of operating the City and to drive energy efficiency, operational efficiency, and drive sustainability. He stated that it is an opportunity to extract significant savings in budget neutral model and leverage it to fund things that you would spend money on anyway. If we can use efficiency to drive improvement in the deferred maintenance, what that ultimately does is frees up cash in the treasury for you to go spend on other things. He stated that last fall they analyzed 24 months of City of Jacksonville utility bills and walked almost all of the facilities in one day with Mr. Oakley and some of his team. We generated a report to the Mayor as to if there is an opportunity to leverage a performance contract in the City of Jacksonville. He stated that the answer is yes to a performance contract. He stated that they came back in January to speak about this in great detail with the Mayor and department heads. He stated that they looked at was this an efficient and a potentially effective process. We looked at how a performance contract could reduce operating cost of the City and use those operational cost to drive City-wide infrastructure improvements. Specifically, we were trying to address four concerns: would this project address mechanical inefficiency and system obsolescence, could it be an opportunity to use Capital funds to make facility improvements without asking for new revenues or new Capital funds, how could this at the end of the day provide a safer more comfortable environment for the City stakeholders to do business with the City and the City staff to operate the public service for the City and essentially how to do what our escalating costs to operate the City buildings. He stated that there is a significant opportunity to address City-wide, what we would call an enterprise wide LED lighting improvement project; to take the entire City enterprise, all City buildings to a standardized platform of interior and exterior LED lighting with setback controls. He then related that there is an opportunity to address a significant amount of inefficient and low efficient plumbing fixtures, water conservation regarding urinals, toilets, and sinks. He stated that they then evaluated the efficacy of solar pv and installation for the City; and identifying what is a significant amount of HVAC equipment around the City that is at or beyond useful life. He stated that lighting is one of those things that pays for itself very quickly and drives extra savings to fund other major Capital projects like HVAC equipment. He stated that the lighting fixtures they use are tier one lighting manufactures such as Phillips, GE, Sylvania, Hubble; firms that will put a 5- or 10-year warranty on their fixtures. He briefed the City Council on properties for having standard lighting across the City regarding safety and efficiency. He stated that regarding the HVAC, the City has quite a bit of HVAC equipment that is relatively new, a few years old, and the balance beyond that is at or beyond end of useful life. He stated that for them at or beyond useful life is 15 plus years, generally 20 years or more depending on the ton-age of the equipment. He stated that the HVAC is an opportunity to drive significant 7 CITY OF JACKSONVILLE RESCHEDULED CITY COUNCIL MEETING FEBRUARY 25, 2021 6:00 P.M. – 7:54 P.M. energy savings and costs savings. He added that this an opportunity to “drag off the table”, what is going to be capital liability in the next several fiscal years. He explained that this equipment will be replaced preemptively or reactively. He stated that they look at design inefficiency or operational inefficiency and they do test and balance which is looking to make sure the buildings are operating at maximum efficiency. He noted that there is a significant amount of R-22 (refrigerant or freon) in this equipment and R-22 is no longer manufactured. It was outlawed by the EPA because of its high ozone factor and around 2017 or 2018 they stopped what is called virgin production. He stated that the only R-22 available on the market is reclaimed and has become a very expensive commodity. He stated that the facilities that are going to get most work based off the population of equipment is the City Hall, Community Center, Public Safety Complex, some of the older Fire Stations and the Senior Center. He stated that the thermostats are basically stand-alone with no ability to operate remotely, which is not the best practice for operating commercial facilities. He stated that energy management controls drive significant efficiency and thermal comfort and costs savings. Adding, that automated equipment operating through network controls that is operating on setback scheduled, there is an inherent value that increases the useful life of the equipment. He stated that energy controls like lighting drives significant costs savings. He stated that there is a good opportunity to do building weatherization, which is doors, windows, eves, insulation, and ceilings abilities. He added that this is one of the things they do that drives significant thermal comfort. He pointed out that this is a very inexpensive improvement. He then addressed water conservation, saying that there is certainly a need to reduce water conservation where it is cost effective. He stated that the building envelope is different from weatherization, adding that there is a little bit of opportunity, noting it is probably a roof replacement or two. He related that they had a long discussion about solar, which is really popular. He explained that this a component passed by the Legislation in the 2019 session that lowered the barrier entry for the public sector. He related that there is an opportunity to build about a 2 mega watt solar array on City owned property which would be a significant costs savings because you are producing your own power. Commercial or industrial customers cannot over- produce; you cannot over build to net benefit but they can be built to zero consumption. He stated that solar pays for itself early on and drives excess savings into the project. This blends the overall payback with other projects such as roofs that do have as high an energy payback. He covered the existing energy cost of City buildings and their ratings regarding energy efficiency. He stated that there are opportunities to address an enterprise wide project to drive significant savings. He related according to 2018 & 2019 data, the City spent on electric and natural gas $332,000. He stated that Johnson Controls believes that a performance contract could easily affect that consumption by 21%; reduce the City’s 8 CITY OF JACKSONVILLE RESCHEDULED CITY COUNCIL MEETING FEBRUARY 25, 2021 6:00 P.M. – 7:54 P.M. utility costs and consumption by $70,000 annually. He stated that the idea is to take those savings to fund projects, adding that the law allows up to a 20-year payback. He stated that in 10 years that represents $700,000 in savings at 20 years it will fund 1.4 million dollars in project improvements and this amount is very conservative. He explained that the law allows for projects to be funded from three buckets; energy savings, operation and maintenance savings, and what they call capital avoidance. He stated that the majority of there projects are funded with utility savings but there is a maintenance savings component. He stated that he feels it is very conservative to say that based on the City’s facilities at $20,000 annually for O & M savings. He then pointed out that $20,000 over 10 years is $200,000 and $400,000 over 20 years. He stated that capital avoidance is when their customers elect to contribute capital on an annual basis to put capital into the project to fund the scope that will not pay for itself in savings. He then pointed out that if a solar array is built it will save the City $293,000 annually. He noted that the statutory limit of these projects is 20 years. He then explained that the solar infrastructure they install is graded by the solar industry as tier one, explaining they install tier one gear, modules, inverters which are manufactured by highly reputable firms such as Kyocera, Canada Solar, Sun Solar. These companies guarantee their production solar modules for 30 years, the third decade after the project is paid for represents 2.93 million dollars in savings by leveraging solar. He noted that they generally do like talking about themselves in the beginning of the presentation but Mayor Johnson wanted me to tell you how great we are and how much experience he has with us and how much he has been around us over the years. He stated that Johnson Controls for 135 years has been in the building technology business, our name sake, Warren S. Johnson invented the electric room thermostat. For the last 135 years, our business has been building technology; adding that he is one of 110,000 employees that operate across 5,000 locations in 152 countries. He then stated that he is 1 of 160 that work in 8 offices across Arkansas of which we have been operating continuously in Little Rock since 1906. We helped the Federal Government pioneer this model; Johnson Controls is the largest and oldest contract provided in the world. We are the market leader in North America and have been for the 33 years we have been in this business of the 135 years we have been in business in the United States. We have close to 660 active projects since January and 16 of those are active in Arkansas today. He then added that they have another dozen projects in Arkansas that have completed payback and are completed. He stated that the reason he has no problem saying that the number of $70,000 is real and conservative, adding that he has no problem saying on the public record that they are going to guarantee that plus some is because of the 3,400 performance contracts they have done since 1983 across the United State, the total value of outstanding guarantees that Johnson Controls is currently at risk for is almost 6.4 billion dollars. That is our liability; of that 6.4 billion we pay shortfall, we do not get out shortfalls, we run an annual short fall service of about 1%. He stated 9 CITY OF JACKSONVILLE RESCHEDULED CITY COUNCIL MEETING FEBRUARY 25, 2021 6:00 P.M. – 7:54 P.M. at the end of the day this is a human enterprise and if the engineers fail to do their due diligence; you have transferred that risk to your private sector partner and I am incentivized to see that we do our job right. That is why we can look at your data, rack and stack it against your colleagues in the regions in the Nation and spend three hours in your buildings and be comfortable saying that number is real. There is a reason we are the oldest and largest and continue to be year after year because we are very good at this and we stand behind what we do. He explained that he is a local resident as well as his parents, saying he is not inclined to misrepresent and poison the well where he lives and does business. He stated that he is very focused on representing the truth and the reality and that is how we do business. We are very confident that this is a fantastic opportunity for the City and we would be honored and humbled to be your partner in helping that become a reality. Council Member Blevins questioned if the $76,000 dollars is an annual payment or is it a one-time payment. Mr. Alex Ray answered that Johnson Controls is not paid through the annual savings. He related that when they do these projects we are paid as a general contractor and construction manager at risk. The mechanics are that when we develop a project and we come back saying that we need 1.4 million dollars to do this project; the City would borrow the money and Johnson Controls is guaranteeing that on an annual basis, the savings are there to fund the note service. Specifically, one of the changes made in the legislation in 2013 is that it redefined the definition of a bond to a lease purchase. He explained that all of their projects are generally funded with lease purchase because they don’t have any impact on the City’s borrowing capacity; it’s not capital debt. He stated that the borrowed money is put into an escrow account owned by the City and from there is looks like a traditional construction project. There is one contract the City signs with Johnson Controls; we are the designer, engineer, procurement officer, and construction manager at risk. We are paid out of the money in escrow as the contractor; every month we submit an invoice to the City and then we are paid out of the escrow account for construction. Council Member Blevins clarified his question is if the $76,800 is paid on top of those arrangements of receiving funds as the general contractor. Mr. Ray concurred, saying that the question is about the cost of the development agreement. He offered that they are not paid through savings, but are paid at the construction event and then we guarantee that on an annual basis that those savings are realized and the sum of that savings must be sufficient to pay back the bank so that it is budget neutral. The $76,000; where we are at now is this was a preliminary analysis that we performed at no costs to the City, this was at risk for us because I wanted to make sure that there was a project. He stated that from here the City would execute that project development agreement; at that point that is where the City would have “skin in the game” and is obligated to Johnson Controls. 10 CITY OF JACKSONVILLE RESCHEDULED CITY COUNCIL MEETING FEBRUARY 25, 2021 6:00 P.M. – 7:54 P.M. Once we go into development over the next 90; we would do an investment grade audit of the City’s infrastructure, we will find things the City has forgotten existed. We will find every opportunity to slow down the meters to produce savings, at the end of that audit, we will facilitate a workshop for the City leadership for them to select the scope of the project. We do not dictate scope to city, then the city selects. At which point, we would put together the project and bring it back for contract. The law requires that the $76,000, which is the costs of the project development agreement be rolled into the project and covered by savings. So ideally, if we go into contract together, and my IGA (Investment Grade Audit) generates this self- fund project and we move forward; that $76,000 has to be funded in the savings. So, if I come up with $70,000 annually, 1.4 million over 20 years that must include the development because the development is all the engineering, all the audit work, all of the construction management for writing scope, walking contractors. The only time the City would be obligated to pay Johnson Controls cash is if we got to the end of the audit, we presented a self-funded project to the City per our obligation and the Mayor and leadership declined contract putting the audit material on the shelf. He stated at that point the City would owe us the costs of the project development agreement for engineering services rendered. He stated that ideally, we deliver the project at the end of the IGA, its budget neutral, and we contract and that $76,000 must be funded with the savings. He then answered Mayor Johnson that if they conclude the IGA and were not able to deliver a self-funded project, the City does not owe the cost of the PDA. He then stated that risk of due diligence is why we did the preliminary assessment. He then answered Council Member Blevins that the Boys and Girls Club and Martin Street Youth Center would be included in the audit. He stated that the IGA is exhaustive and the preliminary analysis was just high level. Mayor Johnson clarified that any City property would be included. Mr. Ray concurred, saying that the prelim was looking at the majority of consumption so we can accurately represent this as a good sampling. He related that in the IGA they will exhaustively audit all of the facilities, the exterior park lighting, the trail lighting, the athletic field lighting everything that was not evaluated in the prelim. Council Member Ray moved, seconded by Council Member Mashburn to adopt Resolution 803 (#1-2021) in its entirety. Council Member Rains questioned if this is a State bidding program. Mayor Johnson answered that it does not fall under that category because they are the ones that are doing everything and the risk. He clarified that she is asking does this have to be approved to spend more than $20,000.00. 11 CITY OF JACKSONVILLE RESCHEDULED CITY COUNCIL MEETING FEBRUARY 25, 2021 6:00 P.M. – 7:54 P.M. Mr. Ray stated no, saying that he can go back to the slide where he talked about the enabling legislation, adding that everything rides under Amendment 89. So, the Legislature passed 4 separate pieces legislation for the 4 separate vertical market; K-12, local government, Hi Ed, and State agencies; all of them ride under Amendment 89. Since, I am at risk and I am holding liability for the performance and our commitment to the City for 20 years, everything falls under Amendment 89 and it is described as I have expressed it. He assured her that it is enabled through State legislation. In response to a question form Council Member Traylor, Mr. Ray answered that when the project scope is brought back to the Mayor, it is the City’s prerogative to say “we are not going to do a 1.4-million-dollar project but are going to do a half of a million-dollar project”. But, what happens is, we do big workshop, we do a computerized tour, everything gets put on the screen together, all of the improvement measures, all of the costs, all of the savings, all of the payback, and the other side of the screen is the cash flow, the total cost of the project and how it pays back, energy and operation savings. He stated that as things are declined that model changes in live time. We just want to make sure that at the end of 20 years that the project is cash flow positive. Mayor Johnson stated that he would like for the City Council to be involved in the picking and choosing. Mr. Ray stated that is typical, adding that it reaches a point where if the project becomes only $200,000; that is going to buy just a few split systems and a handful of package systems and some lighting which would not be worth the City’s time or energy. He then concurred with Council Member Traylor, that if the City did a half a million-dollar project it is cash flow positive because it pays for the $76,000 and other things. He then explained that number was derived on a cost per square foot formula, that is published by the Arkansas Energy Office. He stated that they actually did this project less than the State average and that encompasses all of our engineering, the contracting, we are going to walk the contractors and we are going to write the scope, they are going to tell us who is preferred and not, these projects are guaranteed maximum price, there is not cost overrun, there are no change orders. If we get into construction, and we have a big snafu and missed something, I would not bring a change order back to the City. The only change orders that these projects ever see are initiated by the customer to modify scope. We do not build these projects on estimates, we have firm competitively bid pricing that has been walked (apples for apples) by the City’s preferred contractors for every craft. We strive to keep the money local, we strive to use the people who are in town. He stated that all of that cost is built into that $76,000 so that we know that when we get to the end of the line and you decided to do a $600,000 project, maybe $200,000 is fixed costs such as project management, warranty, risks, taxes, cost of borrowing at 2%. He then 12 CITY OF JACKSONVILLE RESCHEDULED CITY COUNCIL MEETING FEBRUARY 25, 2021 6:00 P.M. – 7:54 P.M. confirmed with Council Member Traylor, that the note payment is annual. He stated that they have a structured finance team at our headquarters in Milwaukee, we are not a financial advisor, we do not make recommendations, referrals or advise. He explained that this is a unique part of infrastructure lending, Cruise and Associates at First Security Bank is one of our National lenders. We have a list of about 29 banks that we work with across the United States. He stated that before it comes back to the City Council, we will bundle an RFP on behalf of the City and give it these 29 banks, giving them 10 business days to bring back their best and final offer for 1.5 million for 20 years fixed. He concluded saying that it would be put into a matrix and hand it to the City and the City picks the bank that they want. Council Member Rains clarified with Mr. Ray, that the soft costs of entering this developmental agreement to go into the audit is for the $76,800 and not $68,000 as it states. City Attorney Friedman stated if the City Council approves Resolution 803, she would correct the written numerical value. Mr. Ray stated that they are not asking the City to pay that, that is what you obligating the City to pay if you elect to walk away at the end of the IGA. He stated that ideally the City would not put any capital in the project because it is totally budget neutral. He then answered Council Member Dietz, that they have a couple of ways to handle the market risk; noting that Johnson Controls is the York factory. If the City prefers a different brand then we will put in that preferred brand. In response to a question from Council Member Rains, Mr. Ray answered that it depends on the type of HVAC system. He said that if is a split system like is found in homes, the American Society for Heating and Refrigeration and Air Conditioning Engineers dictates the standards whereby manufactures certify their system. We call that unitary product small tonnage ASHRA would say 15 years. He added that piece of large equipment it is again 15 years but the market would tell you 20. He stated that the reality is that there is equipment in this City that is 25 years old, so we know that will run longer than 15 years. He then answered Council Member Rains that we are talking about HVAC equipment that has a 20-year life cycle that will be paid off in 20 years; one of the reasons that the statute is limited to 20 years is because we are prohibited from putting equipment in the field longer than the reasonably accepted industry life cycle. He stated that this is an opportunity to break the cash cycle because the equipment would still have to be replaced by the City in 20 years anyway. He added that feels efficient will double in 20 years and the City will want to do another contract. Discussion ensued regarding the use and life span of HVAC systems. 13 CITY OF JACKSONVILLE RESCHEDULED CITY COUNCIL MEETING FEBRUARY 25, 2021 6:00 P.M. – 7:54 P.M. He then answered Council Member Rains that the payoff on the solar array depends because of the myriad of variables when installing large scale utility solar. He explained that solar is one of those things that the economy of scale goes with size, the bigger the array – the lower the cost per watt. He stated that when they go to execute the IGA, they will have to do a geotechnical study and there will have to be surveys, it is possible that in the geotechnical study that it is on a fault line so now it has to be buried with epoxy webbing beams and that has a higher cost than if I were putting it in the ground, saying that it plays into the total cost per watt which determines if it is going to be 17 year payback with 3 years of extra cash flow or something else. He stated that he would surmise that it will not be less than 16 years. Council Member Blevins noted that at the previous City Council meeting he brought up adding an additional Facebook page and adding LED lights to Main Street. He noted that the cost for the LED light was approximately $5,000.00 and the Facebook page is only a couple of clicks. He added that it was stated that the City did not have the money and the lights would be put on the budget for next year. He stated that apparently during that time, there were already talks about saving money with LEDs, saying that his question is how do we suddenly have $76,800 to put towards an audit that may or may not go through; that would also lead into a 1.4-million-dollar leverage for the City or more to do all of this when we did not have $5,000 for lights down Main Street. Mayor Johnson stated that we are not spending any money. Council Member Bolden stated that we are always trying to save money in the City; that is the number one thing we are doing. He explained that at the time that was brought up; there is always something going on that we are trying to do. So, we should be happy that the fact is we are sitting here discussing this and now we can call for the vote and get this started. Council Member Blevins questioned the funding for a “super audit” that would lead to the plan of 1.4 million dollars. Council Member Traylor noted that if the audit comes back and it is not worthy of the City doing the project then the City would not owe the $76,800.00. He then pointed out why would the City not do the project if there is no money paid out but would be paid for with savings. Mr. Ray confirmed that if he does not present a project that is budget neutral, that pays for itself with no money out of pocket, then the City does not owe anything. The City is only on the hook if they elect not to proceed with a budget neutral project. He stated that the only time there would be a cash payment from the City of Jacksonville to Johnson Controls would be if we brought you a budget neutral project and for whatever reason the City chooses not to proceed. Council Member Ray called for a question to the motion. 14 CITY OF JACKSONVILLE RESCHEDULED CITY COUNCIL MEETING FEBRUARY 25, 2021 6:00 P.M. – 7:54 P.M. Mayor Johnson called for a vote. Council Member Rains stated before we move to vote, she would like to thank Mr. Ray for his excellent presentation. She added that she is all for being environmentally friendly and being more sustainable. She stated that she would like to move to postpone this, so that she has more time personally to study this. Mayor Johnson noted that there has been a call for the question. At this time Mayor Johnson took a voice vote. MOTION CARRIED with Council Member Blevins voting NAY. Council Member Bolden moved, seconded by Council Member Ray to suspend the rules and place Resolution 804 on the agenda. A roll call vote was unanimous. e. RESOLUTION 804 (#2-2021) A RESOLUTION ADOPTING THE PULASKI COUNTY MULTI-JURISDICTIONAL HAZARD MITIGATION PLAN FOR THE CITY OF JACKSONVILL, PULASKI COUNTY ARKANSAS. Mayor Johnson noted that Resolution 804 is a housekeeping measure. Council Member Traylor moved, seconded by Council Member Bolden to approve Resolution 804 in its entirety. MOTION CARRIED. APPOINTMENTS: ANNOUNCEMENTS: Mayor Johnson asked anyone wishing to address City Council to have a Council Member sponsor them for the agenda and they can be put on Zoom to address the City Council. He explained that he got a long letter saying that there is a certain Council Member that has not filled out their financial report and is not filling out the other reports required. He then announced that next Tuesday will be the taste of New Orleans and pick up begins at noon. ADJOURNMENT: Without objection, Mayor Johnson adjourned the meeting at approximately 7:54 p.m. MOTION CARRIED. Respectfully, ________________________ _________________________ Susan L. Davitt MAYOR BOB JOHNSON City Clerk-Treasurer 15