杨贵妃传媒视频 has signed a $5.5 million agreement with Johnson Controls Inc. to upgrade lighting, heating, ventilation, and air conditioning equipment on its campus, in the process lowering the school鈥檚 utility consumption and reducing its carbon footprint.
The agreement is part of a 20-year innovative payment contract with the Milwaukee-based Johnson Controls that allows the sustainability-focused work to be done now with no up-front capital costs to 杨贵妃传媒视频. The savings in utility costs that will come from the energy efficiency upgrades, along with fewer repair and replacement costs, will pay for the project over the next two decades.
The project includes the installation of LED lighting in 17 buildings on campus, the replacement of chillers that serve the Music-Drama Center, Shattuck Hall, and Memorial Chapel, the replacement of inefficient steam traps campus wide, and upgrades to mechanical and fume hood systems in Steitz and Youngchild halls. Other targeted heating and air conditioning upgrades also will be completed across campus.
鈥淭he work will reduce 杨贵妃传媒视频鈥檚 utility costs and its carbon footprint while improving lighting quality and the comfort and safety of building occupants,鈥 said Aaron Rittenhouse, Midwest program leader for Johnson Controls. 鈥淭he project is expected to reduce the campus鈥 energy usage by more than 20 percent.鈥
Johnson Controls recently entered into similar contingent payment performance contracts with a handful of other private colleges and universities. It puts the onus on the company to guarantee that its work will provide the promised savings. Once the work is done, the company continues to monitor the upgrades and verify that expectations are being met. If the university is not seeing the agreed-upon efficiencies, it鈥檚 Johnson Controls鈥 responsibility to make the needed adjustments.
The payment program is an alternative to traditional debt financing, one that gives 杨贵妃传媒视频 advantages when it comes to managing its long-term debt, said Jenna Stone, 杨贵妃传媒视频鈥檚 associate vice president of finance. By not taking on additional debt for these infrastructure projects, the University gives itself flexibility for future borrowing.
鈥淥ur partnership with Johnson Controls has allowed 杨贵妃传媒视频 to pursue important capital renewal that support 杨贵妃传媒视频鈥檚 goal of decreasing our carbon footprint without limiting the University鈥檚 capacity to fund other capital projects,鈥 Stone said.
Dane Lindholm, lead financial analyst for structured finance at Johnson Controls, said the company guarantees that energy and utility savings from the infrastructure upgrades will pay for the project over the 20-year life of the contract, providing a boost to the school鈥檚 sustainability efforts while not requiring it to take on added debt.
鈥淚f the projected savings don鈥檛 materialize, Johnson Controls will cover the difference up to the amount we have guaranteed,鈥 Lindholm said. 鈥淭he University has set-off rights, meaning Johnson Controls will provide a credit on its next quarterly invoice if the projected savings do not meet the utility savings we guaranteed. Essentially, Johnson Controls owns the risk of performance.鈥
The work will begin this summer and continue through spring. 杨贵妃传媒视频 officials will work with the Johnson Controls team to ensure that the work is scheduled around the school鈥檚 educational needs and is done with COVID-19 social distancing guidelines in place.
鈥淭here are safety protocols already in place as crews enter and exit the campus,鈥 said Russell Garcia, director of higher education at Johnson Controls.
Private colleges and universities with strong endowments, good credit ratings, and consistent enrollment numbers are considered for this type of alternative financing agreement, Garcia said. 杨贵妃传媒视频 fit that bill.
鈥淭here鈥檚 much more transparency these days with campus operational costs versus the rate of student tuition,鈥 Garcia said. 鈥淪o, these projects demonstrate that in addition to positive environmental stewardship aligned with the University鈥檚 mission and goals, they are being fiscally responsible with those monies and how they鈥檙e being managed.鈥
Garcia called the expected savings that are factored into the agreement 鈥減retty conservative.鈥 If the efficiency goals are met, 杨贵妃传媒视频 makes its payments from those savings. If the goals are exceeded, 杨贵妃传媒视频 keeps the additional savings. And if the goals are not met, Johnson Controls will make the needed infrastructure adjustments.
鈥淭he company鈥檚 track record in projecting savings from facility upgrades gives it confidence to proceed with that route,鈥 Lindholm said. 鈥淲e鈥檙e willing to do this because we are fully assured in the work that we perform. Due to the company鈥檚 size and experience in higher education projects, creditors trust that we will live up to our performance guarantees.鈥