Officials say exemption from revenue limit justified to secure funding for aging heating system
It has been a problem decades in the making, but a divided Northern Ozaukee School Board voted Monday to borrow $571,000 to replace the district’s aging boiler system.
School officials hope to secure that money without the benefit of a referendum.
Following a recommendation from the Buildings and Grounds Committee, the board voted 6-2 to contract with McCotter Energy Systems of Milwaukee to upgrade the heating system on the school district’s shared campus.
Three bids were solicited for the work, with McCotter coming in lowest. Cleaver Brooks offered to do the work for $594,770, and Becker Boiler Co. submitted a bid of $580,765.
District buildings are currently heated by two boiler plants — one at Ozaukee Elementary School with two natural-gas fired boilers and a second with two more boilers that serves the high school and middle school.
“Continual maintenance cost to keep our boilers running along with a high risk of our boilers failing during our cold season has highlighted the need to address this issue efficiently and in a fiscally responsible manner,” said Supt. Dave Karrels in a report on the boiler project.
The heating project calls for consolidating the system to a single plant which would house three boilers.
“This solution allows our district to minimize the risk of a boiler going down during the cold season, reduces maintenance costs and provides an opportunity for energy efficiency savings,” Karrels said.
Depending on the severity of the winter, the new heating system is expected to reduce the district’s heating bills by 8% to 10%.
Ongoing repair work has also made the current boilers expensive to maintain, according to district officials.
When each of the competing contractors made site visits to the school district, they commented on how the district’s current 50-year-old heating plant has been “living on borrowed time” for years, Karrels said.
The new boiler system comes with a 25-year warranty.
While no board members questioned the need to replace the boilers, there was considerable debate over how that project should be financed.
That decision took two separate votes by the board, with both drawing some resistance from board members.
The board voted 5-3 to borrow the money needed for the project over five years from the Board of Commissioners of Public Lands. The loan carries an interest rate of 2.5%.
At that rate, Karrels said the loan would add 14 cents per $1,000 of property value to the school tax bill. For a home valued at $200,000, the loan will cost an additional $28 for each of the next five years.
Board member Steve Burmesch questioned the reason for borrowing the full amount of the boiler work, asking if anticipated savings could be applied to cover some of the expense.
Board President Paul Krause said those energy savings will not satisfy the contractor.
“When McCotter finishes the project in August, they are going to expect a check. They aren’t going to wait until we see our savings,” Krause said.
The final step in the process came when the board voted, again by a 5-3 margin, to utilize a “resolution for revenue limit exemptions for energy efficiencies.”
That statutory provision allows a school district to spend above its revenue limit for energy projects.
The financing mechanism can be blocked if 30% of district voters who took part in the last gubernatorial election challenge the borrowing plan.
Residents have 30 days to make that challenge.
Board members Steve Burmesch, Rick Hamm and Kendall Thistle voted against seeking authority to exceed levy limits.