Muskegon to consider $554,000 engineering agreement with Johnson Controls ahead of possible $5M–$15M energy performance contract

Public Works Director Dan VanderHyde told the Muskegon City Commission the project development agreement on the agenda would fund engineering and design work to define a potential energy performance contract for multiple city facilities. VanderHyde warned commissioners that the $554,000 engineering cost would be owed if the city chooses not to proceed with the eventual implementation contract: “even though… we are not on the hook, so to speak, for these costs today, we will be on the hook for them regardless of whether we go through with the project or not,” he said.

Johnson Controls presenter Chris Downs described the enabling legal framework (identified in the meeting as “public service act 6 25”) and cited a 2019 Marquette project that delivered about $28 million in infrastructure using a guaranteed‑savings model. Downs said Johnson Controls guarantees projected energy and billable‑revenue savings and will “make up the difference” if actual savings fall short.

Downs and his team outlined likely scope items that could be included in the eventual contract: replacement of an aged chiller at City Hall, HVAC and controls upgrades at the Public Works building, modular boiler upgrades at the water filtration plant, LED lighting and smart irrigation, and a broad water‑meter replacement and AMI network. The presentation noted the city has about 14,000 water meters, roughly 2,000 of which have been replaced in the prior four years; JCI said completing the remaining meters and creating a customer portal could materially increase billed revenue.

VanderHyde and JCI estimated the implementation phase could range widely depending on scope — Chris Downs said it “could be anywhere from $5,000,000 to $15,000,000” — and that financing would likely use a 20‑year tax‑exempt lease or similar vehicle. Commissioners pressed staff on whether the commission could set an upper limit; VanderHyde said staff will control scope during the engineering phase and that each time the commission declines a component, associated engineering costs would stop, reducing the $554,000 maximum.

Several commissioners asked about confirming lead in water service lines while replacing meters; Bridal Eistat of Johnson Controls said in‑field verification is low incremental cost while crews are on site. Commissioners also asked about potential rate impacts; JCI said it is “highly unlikely” the meter work would require a water rate increase because increased meter accuracy and captured revenue typically offset costs, and staff said the Commission would see line‑by‑line financials before any implementation vote.

The Commission did not take a formal vote at the work session; VanderHyde and JCI said the engineering agreement will be placed on tomorrow’s consent agenda for formal consideration. If approved, the engineering work will proceed over roughly 6–8 months and return a defined scope, cost estimate, and financing plan for the Commission’s future approval.