Capital Planning Advisory Board

 

Minutes of the<MeetNo1> 3rd Meeting

of the 2010 Calendar

 

<MeetMDY1> October 29, 2010

 

Call to Order and Roll Call

The<MeetNo2> 3rd meeting of the Capital Planning Advisory Board was held on<Day> Friday,<MeetMDY2> October 29, 2010, at<MeetTime> 10:00 AM at the Kentucky State University Center for Sustainability of Farms and Families in Franklin County.<Room> Senator Jack Westwood, Chair, called the meeting to order, and the secretary called the roll.

 

Present were:

 

Members:<Members> Senator Jack Westwood, Co-Chair; Representative Melvin Henley, Co-Chair; Representative Ron Crimm, David Buchta, John Esham, Carole Henderson, John Hicks, Bill Hintze, Mark Overstreet, Katie Shepherd, and Laurel True.

 

Guests testifying before the Board:† Dr. Mary Evans Sias, President, Kentucky State University (KSU); Jack McNear, Associate Vice President of Capital Planning, Construction, and Facility Operations, KSU; Robert L. King, President, Council on Postsecondary Education (CPE); Sherron Jackson, Assistant Vice President, EEO & Finance, CPE; Sam Ruth, Commissioner of Facilities and Support Services; Paul Kaplan, Senior Advisor and Director, Green Bank of Kentucky Program; and Paul Gannoe, Director, Division of Engineering and Contract Administration, Finance and Administration Cabinet; John Hicks, Deputy State Budget Director, Governorís Office for Policy Management; Greg Dunbar, Manager, District Facilities Branch, Department of Education; Ken Seibert, President of CMTA; Dr. Robert Tarvin, Executive Director, School Facilities Construction Commission; and Larry Owsley, Vice President for Business Affairs, University of Louisville.

 

LRC Staff:† Shawn Bowen, Jennifer Luttrell, and Don Mullis.

 

Welcoming New Members

Chairman Westwood welcomed two new Board members.† Mr. Mark Overstreet, an attorney with Stites and Harbison in Frankfort, will replace William May, whose term expired in October. Mr. John Esham is a Chief Deputy Policy Advisor in the Governorís Office, and will replace Edmund Sauer, who has moved out of state.

 

Approval of Minutes June 10, 2010 and August 27, 2010

There was a motion made by Representative Henley, seconded by Mr. Hicks and adopted by voice vote to approve the minutes of the June 10, 2010 and August 27, 2010 meetings.

 

Discussion of Kentucky State University Capital Projects

Dr. Sias welcomed the Board to the universityís new building, and then discussed several university capital projects involving the General Fund. She said the Expand and Renovate Betty White Nursing Building project would renovate and reallocate space to the nursing program since the current space is inadequate and not well designed for the programís needs. The project is anticipated to cost $7,825,000.

 

The $2,200,000 Construct Pedestrian Bridge project would entail construction of a walkway across US60 from Hathaway Hall to the south campus. Rather than students having to cross the very busy and dangerous highway or having to use the dimly lit and hazardous tunnel, they would utilize the walkway. The university hopes to receive federal funds for this project.

 

The Construct Business and Technology Center project would construct a new building for the School of Business and a Performing Arts Center in Bradford Hall.† The project will cost $79,842,000. The VFA Condition Assessment and Space Study found Bradford Hall to be a substandard space for the Music/Theatre programs and suggested that both the Performing Arts Center and the School of Business, which is also located in Bradford Hall, would be better served in new facilities.

 

The Replace Boiler and add Pollution Control project will construct a new central steam heating plant with a central warehouse and facilities maintenance offices on the south campus. The current facilities are located on the north campus in an area designated by the Master Plan for academic growth.† This $24,414,000 project will extend the steam and chilled water tunnel system from Hathaway Hall to the new central plant.

 

Dr. Sias said there are $1 million of roof repairs on the campus that need to be completed and, even though some federal funding is available, additional funds are still needed.

 

In response to a question from Senator Westwood, Dr. Sias said the university has $325,000 in federal funds for roof repairs and infrastructure improvements to deteriorated buildings on campus.†

 

In response to questions from Senator Westwood, Mr. McNear stated that the roofs in need of repair are 15 years old. He said the university would like to see them last another five years if possible, but money still needs to be earmarked for repairs that need to be done. Mr. McNear stated that the Jordan Building was constructed in 1937.

 

In response to a question from Senator Westwood, Dr. Sias stated that she could find out and let members know which projects are utilizing federal stimulus money. Mr. McNear added that the Pedestrian Bridge project is not utilizing federal stimulus dollars because it is not a shovel-ready project at this point.

 

Status Report on Senate Bill 189

Mr. Jackson discussed a status report on Senate Bill 189. This bill was passed by the 2008 General Assembly, and directed the Finance and Administration Cabinet and CPE to prepare two separate reports recommending a process for funding deferred maintenance of state facilities. The Office of the State Budget Director was to help in preparing both reports. The bill was based on a recommendation made by the Capital Planning Advisory Board in its 2008-2014 Statewide Capital Improvement Plan.

 

Mr. Jackson briefly discussed the first three report recommendations: establish a long-term financing commitment/strategy supported by the legislative and executive branches and the postsecondary institutions to annually spend a recurring amount of dollars for asset preservation; balance the desire for new construction with the need to provide funds for asset preservation and renovation; and invest in capital construction and asset preservation starting with the 2012-2014 biennial budget.

 

The fourth recommendation called for developing a statewide policy on long-term asset preservation that clarifies the financial responsibility of the state and the institution. Mr. Jackson said knowing who is responsible for the maintenance and operation of the facilities will also help CPE and the institutions to better prepare budget recommendations for the General Assemblyís consideration.

 

In response to a question from Senator Westwood, Mr. King said the decision to renovate a building or tear it down is in part determined by how often the space is utilized.

 

Mr. Hicks noted that during the 1998 and 2000 sessions, it was established that if the General Assembly would set aside funds for deferred maintenance, the institutions would match those funds. Mr. King added that the long-term plan should include a financing mechanism as to who will be responsible for the funding of these projects and in what proportions.

 

In response to a question from Mr. True, Mr. Jackson stated that institutions annually create a maintenance type pool based on fund balances much like the maintenance pools created in the Appropriations Act for state agencies.

 

Next, Commissioner Ruth and Mr. Hicks updated members on the implementation of Senate Bill 189.††††††††† Mr. Hicks said the Governorís Office for Policy Management has polled other states to determine how they handle deferred maintenance needs. These states included Florida, Illinois, Indiana, Ohio, Tennessee, Virginia, and Utah. Mr. Ruth added that determining deferred maintenance should be viewed as a cost avoidance expenditure. As an example, he said $3,000 was spent to rebuild a distribution pan on the cooling system at the Kentucky History Center in Frankfort. By not completely replacing the cooling system, the Commonwealth saved $100,000.

 

 

Update on Energy Efficiency in State and School Facilities

Mr. Kaplan and Mr. Gannoe updated the Board on the Finance Cabinetís efforts to implement 2008 House Bill 2, which deals with the efficient use of energy. Among other things, HB 2 established the High Performance Building Advisory Committee (committee) and directs that all public construction or renovation projects funded 50 percent or more with state funds meet high performance building standards established by the committee.†

 

Mr. Kaplan said all new construction and major renovation projects between $600,000 and $5 million must be designed and built using the United States Green Building Councilís Leadership in Energy and Environmental Design (LEED) rating system. Mr. Gannoe then presented a list of state-funded projects that will seek or have already achieved LEED certification.

 

In response to a question from Ms. Henderson, Mr. Gannoe said there is a minimal increase in cost for a facility that is LEED certified. He said initially, there was an increase cost in the consultantsí fees, but that has gradually gone away. The additional cost can now be attributed to the additional paperwork required for certification. Mr. Kaplan added that the cost reflects the experience of the builder and the engineering firm.

 

††††††††††† In response to a question from Mr. Hicks, Mr. Kaplan stated that LEED certified buildings are different than normal construction projects in that more collaboration is required between the engineers and architects. Also, energy usage in a LEED certified building must be tracked for up to two years after construction is complete. Mr. Gannoe added LEED certified buildings use recycling of gray water and runoff water also.

 

††††††††††† In response to a question from Representative Crimm, Mr. Kaplan stated that LEED standards are some of the most recognized in the nation. He added that the federal government has also adopted LEED standards for its construction program.

 

††††††††††† In response to a question from Senator Westwood, Mr. Kaplan stated that geothermal heat is not required in LEED facilities.

 

††††††††††† Senator Westwood thanked representatives of the Finance Cabinet for their presentation. He then introduced staff from the Department of Education and the School Facilities Construction Commission to discuss ongoing efforts to reduce energy usage in Kentuckyís K-12 school facilities.

 

Mr. Dunbar said Kentucky has approximately 300 schools with geothermal heating systems and 60 Energy Star rated schools. He said all new school facilities are now designed to be Energy Star schools.

 

Mr. Seibert then discussed the opening of two new net zero energy schools in Kentucky in 2010.† Richardsville Elementary in Warren County opened in September 2010 and Turkey Foot Middle in Kenton County opened up last fall. A net zero energy facility is defined as a facility that produces as much energy on site as it would consume off the electrical grid. According to the latest energy codes for Kentuckyís climate zone, a K-12 building can use 73 units of energy (measured as kBtus) per square foot per year. In addition to using geothermal HVAC systems, ways to save energy in these schools include utilizing natural/day lighting systems and energy efficient kitchen equipment, and wireless computer systems with moveable laptop carts, which eliminate computer classrooms.

 

Senator Westwood commented that Turkeyfoot Elementary students were involved in the architectural designing of the school and that has been a great educational benefit to the students.

 

Senator Westwood next introduced Mr. Owsley, who discussed energy efficiency saving measures being implemented by the University of Louisville (UL). UL recently initiated an Energy Savings Performance Contract (ESPC) for work on the Belknap Campus with Siemens Building Technologies, Inc. In October 2009, Siemens began work with the university that will reduce the Belknap campusí $8.4 million utility budget by 26 percent annually. The scope of work includes heating, ventilation and air-conditioning upgrades; lighting retrofits; building and facility improvements; and water-conservation measures.† The project will impact over 4.3 million square feet in 69 buildings on Belknap campus.

 

It is estimated that upon completion of the ESPC, UL will reduce Belknap campusí electricity use by more than 20 percent and reduce its heating fuel consumption by about 30 percent annually.† This savings equates to over $2.3 million annually and the university estimates that the project will pay for itself in 13.5 years.† The work is scheduled for completion in early 2011.

 

The total cost of the ESPC is $21.7 million.† Of this amount, $20.4 million will be financed over a 13.5-year period at an interest rate of 4.79 percent.† An additional $200,000 allowance is included in the contract for unforeseen construction costs.† As a result of this project the university received a $373,000 cash rebate for reducing its electricity consumption.† The rebate is available through a Commercial Rebate Program run by LG&E and Kentucky Utilities Company to encourage customers to replace aging equipment.†

 

Senator Westwood said there were five Information Items included the memberís packets: an Update on Kentuckyís Credit Ratings; 2010 Debt Medians; Appropriation-supported debt and debt restructurings; Pew Center Study on Kentuckyís increasing prison population; and the 2012-2018 Capital Planning Process Schedule.

 

Next Meeting

Senator Westwood stated that the next meeting would be in May or June of 2011.

 

Adjournment

With there being no further business to discuss, the meeting was adjourned at 12:39 PM.