Johnson Controls pitches $70.6 million energy performance contract to Sachem; board hears details on lights, boilers and an 8.5 MW solar plan

Johnson Controls told the Sachem Central School District Board of Education on Feb. 5 that a comprehensive $70,600,000 energy performance contract could pay for itself from guaranteed energy and operations savings and leave the district with tens of millions in net cash over the contract life.

The project, presented by Danny (Account Executive, Johnson Controls), would combine six major measures — a districtwide LED lighting retrofit (about 24,000 fixtures), boiler plant replacements and conversions, a new open‑protocol energy management system, variable‑frequency drives, site and roof solar (about 8.5 megawatts proposed), and additional efficiency and controls work. Danny said projected first‑year energy savings are about $2,769,000 and additional operations and maintenance savings about $888,000; he presented a projected net cumulative cash flow of roughly $23.6 million over the project life without federal incentives and roughly $37 million if a referenced federal incentive (IRA) is available.

Why it matters: Johnson Controls’ plan would replace aging mechanical systems (many boilers date to the 1996 performance contract) and modernize lighting, which the presenter said would improve classrooms while reducing utility costs. The solar proposal is large enough, the company said, to make Sachem one of the first New York school districts to qualify as net‑zero electric for on‑site loads, which would substantially change operating budgets and energy procurement over time.

What presenters showed and guaranteed

Danny described the lighting measure as the largest single installation of LED flat panels on Long Island, with smart fixtures and controls sized for classrooms, gyms and common areas. He said the lighting measure alone would save about $609,000 per year in energy.

Steve Stewart (Principal Engineer, Johnson Controls) summarized the heating measures: failing condensing boilers and older sectional boilers would be replaced or refurbished with high‑efficiency Endura units. At Grundy, Johnson Controls proposed extending natural gas service and installing dual‑fuel condensing boilers. The company estimated the boiler measure would save roughly $875,558 per year (energy plus O&M impacts called out in the presentation).

On solar, Danny described an 8.5 MW program that mixes roof, parking‑canopy and ground‑mounted arrays in specific lots. He said the design team had done structural roof reviews and drilled test holes in parking lots to verify siting. Solar, he said, would put electricity credits into a district “energy bank” to offset bills across schools; the team estimated roughly $1.6 million per year of electric production going to that bank (subject to interconnection and tariff details).

Guarantees, warranty and risk

Johnson Controls presented these contractual protections and warranties: a written performance guarantee covering savings for the life of the contract (company said the guarantee is in writing for the 18‑year state review period), LED fixtures with a two‑year parts‑and‑labor warranty plus attic stock for replacements, and tier‑1 solar modules (Qcells) with a 25‑year production warranty (manufacturer guarantees at least ~80% output at 25 years, as company noted). Presenters stressed that many major components are manufactured in the U.S. (the Presenter identified the Endura boiler maker as being manufactured in New York) and said local stocking and warranties would limit schedule risk. They also acknowledged some lighting control components and small pieces of equipment come from overseas, which they said had not caused delays so far.

Financing, state aid and federal incentives

The Johnson Controls team ran a financing scenario in the presentation that assumed about 4.5% interest, 66% state building‑aid treatment for eligible measures, and a 15‑year tax‑exempt municipal lease (TELP) payment schedule. Under those assumptions the first full year debt/lease payment post‑construction was shown around $6,400,000 and the firm showed a positive net cash flow after the financing and aid assumptions. The company recommended structuring to a 17.9‑year project life so the package meets the state’s maximum allowable simple payback threshold (under 18 years) while maximizing capital upgrades.

Presenters also described the federal Inflation Reduction Act (IRA) as a significant potential source of one‑time funds (the presentation showed an illustrative $13.6 million IRA benefit box). Danny told the board the IRA guidance is evolving and advised contracting quickly to “safe harbor” some of that incentive if the district wants to maximize that funding stream. He and board members discussed a known political risk: the IRA incentive is subject to federal program rules and evolving guidance.

Board questions and implementation concerns

Board members — including President Scavo and members who identified themselves as Alex, Meredith and Mary — pressed on lifespan and replacement risk (LEDs were described as long life with attic stock and a two‑year warranty), whether parking‑canopy columns would reduce parking spaces (company said no net loss of spaces and columns are placed between stalls), vandalism or safety of ground mounts (company proposed fencing and signage; presenters said they have not seen vandalism on similar Long Island projects), and the effect on future needs such as electric bus charging (company said charging infrastructure is outside the scope of an EPC because adding charging changes the district’s load profile and must be handled separately). Michelle Sarakis (business official) participated on financing questions: if the district pursued the EPC, she explained, the lease payments would be an exclusion on the tax levy and could raise the levy the first year (company’s illustration estimated a roughly 5.5% one‑year levy effect in the financing example as debt service comes on to the books).

Next steps and board direction

Johnson Controls asked the board to authorize moving a contract to the district’s energy/municipal counsel for review (presenters said the company’s attorney, Ingham & Smith, had a contract template ready). Presenters asked for a board vote as soon as the board and legal review were complete; they said early March was possible if the board wished to fast‑track approvals so the project could lock potential federal incentives. No formal board vote on contracting occurred at the Feb. 5 meeting; members asked staff to circulate a draft contract and to continue work on interconnections and state reviews before a formal decision.

What remains uncertain

Several project inputs remain contingent: utility interconnection approvals (several packets were filed with PSE&G and National Grid), final state education department technical reviews (architectural and mechanical signoffs), the ultimate availability and sizing of federal incentives, and a final financing package. Johnson Controls said savings are guaranteed in the contract; the company committed to cover shortfalls if guaranteed savings are not realized under the terms of the performance contract.

Ending

Johnson Controls’ proposal would replace aging boilers and lighting across the district, add a large solar system, and — according to the firm’s modeling — pay for itself from guaranteed savings while improving building conditions. The board asked staff to circulate the draft contract to the district’s counsel and consider a vote at an upcoming public meeting after legal review and state technical approvals.