001Just check. Yeah, I think Uh, good morning. Thank you all for joining us. Um, we will at this point call the special board meeting to order. Mr. Davis, roll call, please. >> Mrs. Ikeultz, >> here. >> Mr. Marks, >> here. Mrs. Singh, she will be via Zoom. >> Mr. Summer >> here. >> Mrs. Tullus. Mr. T. Sorry, I'm I'm trying to pay attention to what's Mr. Tull. >> Thank you. >> There's a joke in there somewhere. >> Um, is there a motion to adopt the special meeting agenda? >> So move. >> Second. >> All in favor? I >> like to ask for to stand and join us in the pledge of >> allegiance. United States of America to the stands nationis. >> Um thank you uh thank you all again for joining us today. Mr.
002Kckki, you want to start off with the superintendent report? Thank you. Uh welcome everybody. We've got a couple of personnel uh actions today under um 5A. Number one, the approval of administrative contracts uh new middle school principal, which I'll make some remarks about in a few moments. Uh approval of some certified staff contracts, classified employment contract recommendations for this year uh for aids, um classified salary adjustments, and approval of supplemental personnel service contracts uh for transition time. And I would ask the board to if there are no questions to entertain 5A 1 through five at this time. >> So moved. >> Second. >> Mrs. Zik >> I. >> Mr. Sunroll. >> I. >> Mr. Marks. >> Yes. >> Mr. Tullus. >> Yes. Thank you everybody. If it's okay. Mr. Tullus would like to make a
003few comments about our new middle school principal. Uh, Miss Lauren Gentine is here with us today. Okay. Hi, Lauren. Could you stand up and come on up to the podium, please? Welcome. Lauren uh brings an exceptional amount of experience to the Hill School District as a seasoned instructional leader and head principal the past four years at Mason Middle School. She's managed a staff transition during a facility construction project. also while at Mason. Um I have a lot of confidence that Lauren moving through a very thorough and rigorous uh selection process over the last five and a half weeks of her life uh with such poise and grace. Uh we're very uh proud to have her here. Prior to her tenure as an administrator at Mason Schools, Lauren served students as a teacher for five years,
004including a year here at Indian Hill High School in 2014, where she taught language arts for a year before she returned to Mason as an administrator. Lauren earned her bachelor of arts from Ohio Wesling University, her master of arts from Xavier University, and she's currently in the doctoral program at Miami University. Um, we are so excited to have Lauren here to join the Indian Hill family. And congratulations, Lauren. Welcome. >> Thank you. Thanks. Uh, if you'll indulge me in a quick story. Um, just before the 20145 school year, I was shopping at Target. I was teaching in Mason. Had a great schedule, a great thing going. loved it there. I ran into the Indian Hill High School principal and he said, "Hey, I have an English opening." Well, I'm not looking to leave. And he
005said, "Oh, just just come meet us. Meet the team." I fell in love with it here. Uh so I joined the high school staff as an English teacher and loved it. Loved every second of it. Um but decided I was ready to to jump into administration and actually at at his encouragement. He did a lot to teach me that year. So Mason hired me back as an assistant principal. I've spent the last seven years there. Well, uh, right at the end of the school year, one of my students from Indian Hill and I I only had a few. I was only here that one year uh, reached out to me and, uh, mentioned what an impact I'd had on her life. And I thought, gosh, I I kind of forget about my year there. It
006was easy to forget. It was so great. I would have never left if it weren't for this move into administration. Then a couple weeks later, I um make a random phone call to an Indian Hill administrator about an unrelated situation and she says, "Oh, I thought you were calling about my job. They just posted it today." So, you're kidding. I'm not looking to leave, but let's talk about this. Um so, the way that this has um laid out for me is uh similar in that I try to keep my head down, do a good job, serve the people where I'm at. Uh, but when Indian Hill comes calling, it's hard to it's hard to turn away from that. Um, I'm thrilled and humbled. Um, I'm not naive though, and I talked a lot about this
007in this process over the last several weeks. I'm not naive to the work and the challenge that is ahead of us, particularly as we go through uh facilities project. Um, at the same time, what I've learned in doing that is when we're intentional about looking for the opportunities in those challenges, uh, looking for the ways in which we can more intentionally come together as a staff because it's it's not convenient. It's hard when we can look for opportunities to connect with each other, to connect with the kids, to prepare our instruction and prepare our classrooms for the uh the beautiful facility that will that will open. um we learn so much more than if we just were keeping our head down and going through it. So, I'm humbled and I'm honored and I I really
008can't believe I'm here um because it's so exciting. It's the opportunity of a lifetime and uh and I won't let you down. Thanks. >> Thank you, Lauren. Welcome again. Uh Julie, I know that you're in the back there. Did you want to say anything? Yes, congratulations for a rapid intensive interview process. But think how much easier the work will get when you're joined by a dedicated truly innovative group of teachers. I also want to say thank you for seeking out the opportunity to your creativity and passion for those learners. We're just >> board members. Just as I asked you earlier, just make sure to, you know, full disclosure, we don't really have a middle school at this point. So, just want make that sure that's clear that we will. But, um, welcome to the team.
009Glad to have you. >> Thank you. >> Congratulations, Lauren. Thank you. >> Thank you. >> That's all for my report. Transition into the work session. >> On to the work session. Um, we'll start with the presentation of the construction team. Who's Holly? You want to lead us off? Well, good morning everyone. I'm Holly McClean with MCS and Associates um as owners rep here. We've got our full project team with us with MSA and and um Skansa. Um just working through some of our project status update today. We're coming before you. We've got um some GMP amendments to the contract for to finalize with the primary school, elementary school, and middle school and getting things moved forward with that. Also looking for consideration today on um two items with direct purchase for uh materials and installation
010of kitchen equipment. And as we look through here, we can start by doing a project status update on each of these. Primary school is well underway um go back one. Thank you. Um primary school is well underway um this summer with some of the renovations at this point. Uh, with that, the only other items we needed to purchase to make it fully contracted at this point were the building control system and then also um an allowance for some irrigation system outside of that. Uh, as we look at that, >> no, you're good. >> We just want to see Nikki, too. Yeah. Okay. Um, as we look at this current construction cost of total cost of everything at this point is 11.3 million. Um, that is approximately 8% over um from our 2019 and 20 budget
011to what current costs in the market are today. As we go to elementary school also elementary work has started over there. Um, looking at this current total cost for this with the remaining packages and finishes and interior right now is 17.7 overall. Um, the GMP today that finalizes this portion out is about $7.8 million. So, looking at the middle school, which as you walked in and as you're noticing your new building over there, um, still coming out of the ground on that one. Um, foundations should wrap up by the end of the month here and starting to go vertical. So, we will definitely see some enclosures and and things like that in the next couple months for that. um with this about I would say 50% has been contracted through site work construction um foundations
012some of the more structural pieces for this GMP that we're looking at right now this is more of the finishes the interior portions of this and total current overall cost of about 55 close to 55.8 8 million overall for this project. As we move um there's two other projects within this and we haven't forgot about them. We just haven't started on them yet constructionwise, but we've definitely um started to look at and MSA is finalizing design um about September of this year for some of the high school renovation portion as we're tying into the building and making sure that all things are operational. The only thing we've contracted so far because of how far the procurement dates are out is electrical switch gear um to kind of tie that into the building. So, we have
013tried to pre- purchase some of the larger pieces of equipment early on to make sure that they're here in time for what we need to turn over. Um, and then looking at the transportation building also on a September timeline basis of getting final design for that and looking to contract by the end of the year on that as well. So, we did purchase a generator for that. Um, it is in the mix of getting here at some point. So we have been tracking all these pre-purchased um larger pieces of equipment so that we can uh bring those into the fold. And then looking at our total overall um we originally started with our master plan budget of 77 million from the bond issue. Um added scope included some of the items where we started to
014get into this renovation and understood the scope and depth of uh where some of these systems were at. The board looked to approve about 1.9 million of that for our total budget. And right now our total cost overall with all five projects is about 91.8 million. I think there's one more slide. Oh, this is just some of the comparables from the last year. I know we're um from when the bond issue was passed to now, market conditions have changed and procurement times have changed overall. Um just wanted to give you guys another snapshot of where our market trends have been going um and where Indian Hill has kind of fell within that line. And then there's one more slide for us. So, next steps, um, finalizing the GMPS and and finalizing the contracted amounts for
015the remainder of the work at middle school, elementary school, and primary is what we're looking at considerating considering today. And then also the kitchen equipment that I didn't put on there, but is definitely a part of those projects. Um, and what you and then looking at finalizing some of the contractual work for high school and transportation at the end of the year. Are there any questions? Um, I don't have any questions at this time. I guess just for anybody out watching or looking at the the cost increase, um just know there's been a lot of time and effort spent by by us, by our construction team, by our owners rep, uh by everybody really to go in and look at every possible way to achieve savings. Um it's no secret this is an incredibly difficult
016market right now. Um both from a labor perspective and a cost perspective. And our our charge is to find ways to save dollars without sacrificing quality. and we're confident that we're going to get there. Um it's no question it's a challenge, but everybody's been putting a ton of time and effort into making this um you know dealing with this as best we can in a difficult situation. So, thank you Holly, your team and and all who have helped. >> Holly, the kitchen equipment that's all included in the normal numbers, right? That's not addition. >> No, this is uh that was in the budget beforehand. we've kept to that I think um over a million dollars worth and we're about $10,000 off overall for the kitchen equipment. So doing that direct purchase is um we've worked
017with the teams to understand what equipment where um worked with your staff and the the team's done a great job trying to get that um bid out properly and and we've got the contracts that that we'd like to for you to consider today. Thank you. >> I just want to echo what Bear said that appreciate the work that MCS and Scan everyone's done. I know that there was a lot of questions around cost and multiple meetings of going through and trying to rework things and seeing how we could trim something here and trim something there without, you know, affecting the project scope and appreciate the work that everyone's, you know, put in. So, thank you. We definitely want you to have the program and the quality that you want at the end of the day
018and to make sure that I mean when you I know I'm pointing at you, but I was like when you're going to move into this to this building. So, >> thank you. So, board members up for consideration are the three GMPs uh that we'd like to uh discuss here today for uh the timeline, middle school, elementary, and primary school. And you've had those resources. And uh if there are no further questions, we we need to consider those today. >> I do have one more question. So on the GMPS, I just want to make sure that there's nothing that can happen for us to exceed these numbers. They are an absolute ceiling that we will not exceed under any circumstance. Is that the way I understand that? >> We've taken every precaution to try to mitigate
019any potential risk moving forward. Um, I I can't stand here and tell you absolutely not. There's no other way because I think we've probably been proven wrong a couple times in the last few like last probably 18 months of how the market trends were going to go and where they're going to stay and when they're going to plateau in certain regions. But we've put as much language into those contracts and amendments as we can to help mitigate that risk and and look at all the possibilities that we can see. >> There's certain things that are like we have allowances for certain items and those could you know if the allowances if the materials for those allowances end up being more we do have some continued risk. I think the more we can track today and
020the further we get into the project the more that risk goes down. >> Yeah. But to be clear there that that risk continues >> and we do have we still have in those numbers all the contingencies from before of the owner's contingencies that you've seen. Um we're keeping allowances in for certain items that may shift during time. So we're trying to give you the full numbers um with those contingencies and allowances. Um I think I'll reiterate what I'd said before. we're starting to get out of the ground now. Um, soil is your biggest risk to start out with. Enclosure is the next one. Um, and that's what we've been working on and what's included in there now. Um, with that, but once we start to take away some of these factors, that risk starts to
021to melt away. We still have a little bit north between the CMR and the owners, a little bit over five million combined between the two. Is that right? So we've got, you know, some room for coverage. >> So there's approximately 3.2 out of the owner's contingency at this point and then there's about 1.2 from CMR standpoint overall. >> So if we had a subcontractor that changed their mind and did not want to do this, we'd have to go out and find someone else and then we'd have to start from scratch, whatever that number will be. So that would be outside of this GMP. Is that correct? >> Our risk within the GMP. >> Yes. >> What other big risk would you would you foresee? >> I would say the remaining work out >> and how
022can we do that in a quick and efficient way to get more of this locked in sooner than later? Well, I was like I I think it's just at this point um finalizing there there's only a a small portion and um I can share it with you. I kind of did a Gant chart of a visual of this is how much you've contracted to date. This is how much we're asking to contract today. And then the small portion at the end are some of these allowances that we've built into that number that um require further design. But it's a very compared to what we're trying to contract today is a very small portion of that. >> Okay. >> So we're probably looking at approximately 34 million total of contractual items today. That includes probably three
023I was going to say $3 million of allowances at this point. >> And is there a reason why we can't do more of that sooner than later? Um, well, it we're trying to do it sooner, but it's it's finalizing design and making sure that we're getting all the visuals that your staff and administration need to make those final decisions. um we're used to seeing things in 2D form and on paper and and working with that, but I was like until we get some um some shop drawings and actual samples for you from the contractors and shop and and getting that piece finalized. We want to make sure that you're getting the product that you envision. >> Sure. >> Moving forward. >> Sure. I just want to make sure we're doing what we need to on
024our side to keep the process moving. And I want to be several steps ahead of this >> because of what we're dealing with in this environment. >> And the more we can get it locked down sooner versus three months or five months from now, >> I think it's in our best interest. >> Absolutely. >> Thank you. >> Yep. >> Any other questions? >> Like I'd like to make Any other anything else? I'd like to make a motion to approve the uh GMPs that are in front of us today. >> And the kitchen and the kitchen purchase, kitchen equipment purchase. >> So move. >> Second, >> Mr. Marks. >> Yes. >> Mr. Summer. >> Yes. >> Mrs. Yes, >> Mr. Tuls. >> Yes. >> Thank you. Thank you. Thank you, Holly. >> Thank you, Holly. Thank
025you to all of our project team members who are here and uh we know that's been a lot of hard work over the last uh two months to get to this point and uh we'll look for another report here uh soon. Thank you. Finance team up next. Yes, board members, we have Andy Brosard here uh with uh Bradley Payne and Kent Castel and Andrew Laskkey are here from RBC Capital Markets and they are going to share with us some information on uh supplemental borrowing options today. Well, >> thank you. It's uh good to be here in Indian Hill again and as Kirk said, I do represent our whole financing team. Andy Brer in the back and Laskio works with me at RBC. So, we put together just a very brief uh slides for you to
026take a look at. you may have take already looked at. Um I think our part of this is best served as a resource for you guys uh in question and answer or discussion. But I'll walk through these quickly. Um a little bit about market conditions. The AAA MMD uh curve is MMD is the index that measures the tax exempt market um which we borrow in. Obviously we we are correlated with treasuries but not uh directly correlated. So we have an index that tracks this and this just shows um the the top left is the the graph on the left is like a longer term historical perspective of the rate um 10 year 20 year and 30 year o uh over a time period from '09 till now. That does give you a perspective that although
027we know that rates have risen you can see that in the historical perspective um we're still um on the lower end of of of middle. I would I would c characterize it. Uh the graph on the right zeros in on um July 21 till now and that's the rise in rates that we're all well aware of. Um most people are well aware of it on the Treasury side. Follow the Treasury and the Fed. Um but it has affected our market as well. Um if you go down just a little bit, you'll see some uh maximum, minimum, and averages over those two uh time periods. So it um it it gives you an idea of where we are uh today on the on the left there at the current. Um one thing that is um kind
028of conclusy from this from the current market is is that there's not a huge penalty for going long, right? Uh you hear people talk about an inverted yield curve. Uh simply means that short-term rates are actually above long-term rates. Um, and while we don't have an inverted yield curve in the tax exempt market, we certainly don't have uh a big difference between short-term rates and long-term rates. Um, and if you go to the next slide, I think it shows that pretty well. Two things from this slide. One, the the blue line is the um historic average of these rates and the red line uh represents where we are today. And I, you know, I point that out because virtually every client that I work with that went on the bond issue in the last two
029years is dealing with this situation. Um, so it's uh obviously not unique. Um, but th this at least puts it in perspective because some people I think believe, oh gez, we're getting hit with this inflationary problem and and right at the time when rates are high. Uh, they're not high. They've risen. Um but historically they are they are still um below the historic average. Um the bottom line and that there's a top line you can hardly see there but there's a big range of what it's been over a long period of time. Um but we are below the historic average um uh over like a 30-year period. Um and then lastly uh another indicative uh chart of the percentage the time that rates have been lower since uh 1991 again 30 years. On the short-term
030end um they've been lower um almost 50% of the time but on the long-term end it's less than 25%. Another way of saying that rates are still low. So, uh, all that's just to set this up to say that if, uh, part of our solution here is, um, borrowing additional dollars to support the project, um, then, uh, it is not, uh, quote unquote bad time to borrow. Um, so lastly, we'll talk about this, and I think getting to Q&A here is is is best. How you do this is not um is not hard in terms of borrowing additional dollars to support your project. Again, we have districts all over the state that are looking to do this. Um, and we know the best ways to do it to get the lowest possible rate. Um, but
031really the question that we often deal with here is uh I want a public policy question. I guess I would say it when you look there's a reason why you passed a bond issue for 30 years. And uh the reason you do that is because it's going to be used over 30 years at very least. It's a public asset. It's different than our private financial lives. And so there's going to be people who use it over that 30-year period. It's going to be different people using it. Um and so you could have gone on the ballot and said, "Let's pay a bond issue off in 10 years." And what that would have meant is exorbitantly high taxes on your current residence so that somebody who moves in in year 11 pays nothing, right? And so
032that's why we don't do that. Uh that's why in public policy we borrow over a long period of time. And as a person who probably doesn't have 30 years, I really appreciate it when uh my public officials do that. And that's how people don't tend to think about it that way, but that's how we really do need to think about public policy and public finance. And so uh you have options for borrowing. I won't get into the how unless you really want to because we've got that covered. Um the question comes down to um what's our annual payment? When you pass a voted bond issue, you get the uh the authority from your voters to not only issue the debt, but to levy a tax, to make the payment, and that tax is levied every
033year at whatever rate is necessary by the county auditor. It's outside of the political process. Um and so you have the revenue to make the payment. It's the way we handle large projects in Ohio. when you do a supplemental borrowing like this, unless you went back on the ballot uh for some additional revenue, you're really looking at this from the perspective of what can I handle within my own budget, current resources. So that's what again lots of uh school districts are doing right now. When when you look at it from that perspective, what most of the clients uh I work with are asking is is it appropriate to borrow long and how long can I borrow? Um that may not be the question we're answering here but I want you to understand what others are
034doing in the state. Uh the reason being is they want to make the impact on their current resources as small as possible. So it's it's just like you can imagine you certainly pay more interest by borrowing longer but your annual payment is lower. And to put that in perspective, if you look at that chart, um, for about the same annual payment over 10 years, you you you can borrow uh 5 million over 10 years. For the same annual payment, you could borrow 10 million over 30. And so that that uh that's these are all obviously estimates that change every day based on current market conditions. So just consider these a ballmark. But the important column is that column second in from the left, the average annual payment. And um that's what you need to struggle
035with. and and come to grips with with when you're looking at a supplemental borrowing and and what can we handle uh out of our current resources. That's how it works. How we borrow this money if you want to talk about is we can but we have we have ways to do it depending on the length of the borrowing that you decide on. Um we help determine the method of sale if you will the method of borrowing it. So, I guess I'd stop and and open it up because I think this is a better conversation for almost better for Q&A. >> I guess a couple things. Um, thanks for the presentation and the stuff we've gotten over time. All three of these options in terms of um all in terms of the um prepayment penalty falling
036off after eight years. It's not the bottom. Is that on the 20-y year and the 30-year? >> Sure. >> Is it's on both of those? >> Yeah. >> Okay. And in fact, it could be on shorter depending on we if if we are wanting to borrow over a shorter period of time, we may be able to do a direct lending uh with a financial institution. If we go over a longer period of time, we may we probably would use the capital markets, which is what we use for the bond market bond issue. Since we just did an issue in the capital markets, going the capital markets out is very easy. We just talked to the rating agencies. We just did an offering document. We've done all that. Um but we can build in the prepayment
037option either way. Great. I think not a question, but I think two things that I think are important for the public to know. I think one is, you know, through the work that Bradley Payne, RBC, and Mr. Davis did, you know, the 77 million that we borrowed, we did get a substantial premium on that. Um, and so our our debts down that we owe to the public somewhere in the neighborhood, Mr. Davis, of what? >> 71 71.4 million is what we did that final the final bond offering for. >> So I think it's important to know that that team, right, of Bradley Payne, Mr. Davis, obviously others and RBC was able to substantially reduce that obligation that we have, you know, from the community. And then I think the second thing that Mr. Davis brought
038up um just in conversation was, you know, that we do have the ability, we're trying to keep as much cash as possible to move forward, but we do have the ability and it's limited in terms of what we can do, but to invest our cash to create some type of spread between what we would borrow and what type of earnings we have. um something that's important to know that whatever you know assuming we do move forward um at a future date that these rates that we're paying there is going to be an offset um because we have the ability to invest that and so I appreciate Mr. Davis's wisdom and thinking through all that stuff so that's all I have >> for the first time in a long time that condition is existing yes >>
039but not Mr. Davis's wisdom that's been around for a while. >> No, no, >> didn't mean that. The ability to actually uh earn some money. >> Definitely debatable. >> She made a comment that I think is important. You're seeing this elsewhere. It's not just here. >> Yeah. Yeah. Sure. Think about the process we have to go through with schools. And I know all the construction folks. Um I've been doing this 20 years. Prior to that, I was a COO of Cincinnati Public was commiserating with Jim. I said, "I'm a recovering uh business manager." Uh, you know, you see, I I I have never seen in my time period an inflation figure that high, right? And we worked with the commission back 25 years ago and and you're not, but the point is I follow that.
040So yes, if you we end up having to um vote to go on the ballot months before the election, you know, our bonds aren't even issued till months after the election. There's some risk in that that we deal with every day. Uh we end up going on with the best information we have, but we're well in advance. Um we don't have the uh luxury that some other forms of government do to getting all the way maybe to this point before we even, you know, are raising our money. Um, so anyone who's been on the ballot in the last two years is in this position to some degree. We actually, Andrew and I co-authored an article for the school business officials magazine which mean about this because it's happening everywhere. And obviously it's a simple thing
041at the end of the day. You have a discussion about value engineering which you've done. uh you may look at cash on hand which you may or have done and then you you end up determining whether you need this supplemental borrowing and if you do that article by the way if you want to look at it goes into a little more detail about the how uh but but essentially the the how what I want you to know is that this is common place that this is this particular situation where we need to supplement a loan to a voted bond issue is kind of a sign of the times but school districts borrowing relatively small amounts and not not wishing to go on the ballot for that small amount is very common place. So we do
042it all the time. So basically to recap what you're saying, it's not a case of someone being negligible and not paying attention to the costs, but it's due to the economic situation and inflation that we've been seeing that we're having to do this. >> Well, absolutely. I mean, uh, when you're seeing it in every single project, pretty much that's obviously the case. It's a it's an environmental, um, issue. The broad broad construction environment, uh, when you start with fuel costs, um, that impacts everything because everything has to be brought. >> Thank you. I have anything. >> Thank you. >> All right. Thank you. It's good seeing you. Next up, we have a solar PPA presentation from Monica Nhouse from Malink. Thank you for joining us, Monica. >> Good morning, everyone. Um Monica Nhouse and uh
043Seth Parker here with Malink Solar. Um so, we're going to quickly review um an an opportunity for um for on-site solar. Two main points I want you to take away before we go into this is we've been talking about inflation and you know all these project costs that are way above than what you predicted. Um we've took the conservative approach to assume a certain you know electricity cost escalation rate over the next 30 years. Know that you know we didn't account for the the recent spikes that we've seen recently. Um, however, within our project costs, so it's about a $2.5 million project. Um, that does account for, you know, latest inflation. However, the second point is that this is a way a power purchase agreement or a PPA is a way to finance this at
044no upfront cost. And also, as you look at the next 30 years, it's a way for you to hedge against these future rising electricity prices. So, if I could just frame this for anybody in the public that's paying attention, uh, one of the four pillars of our master facilities um, uh, project were was to maximize the environmental impact uh, on our new build. It was something that our facilities uh, committee wanted us to look at moving forward. And so, we've been exploring and researching these environmental impact options uh, as we uh, look at the build overall over time. And that's one of the reasons why we're having this presentation today, to make sure that we're thinking long term about the environmental impact uh with this build. >> So, a power purchase agreement, again, what I
045mentioned is that there's no um there's no upfront cost. The way to think about it is essentially you're going to be paying Duke Energy for a certain portion of your energy needs and then there's going to be a a third party system owner, you know, who's investing in the system and monetizing the tax benefits since the since the school can't do so. And uh you'll be paying per kilowatt hour to the third party owner. Um so that's where the monthly payments come into place. Um, again, Duke Energy and then the PPA owner. The the term that we propose is it's a 25-year um PPA. Um, and we've built in a 1.5% uh escalation rate, but that is fixed. So, you know what you're going to be paying per kilowatt hour for the next 30 years.
046Um the the reason why this is urgent this year is because the current federal investment tax credit is 26% and that's going to be dropping down next year. Um the PPA owner would monetize those benefits and then sell, you know, a um a a smaller kilowatt hour rate back to you guys since they since they have those higher tax benefits. Um, so you still get the long-term benefits of it. It's creating a a fixed energy scenario for for the long run. And additionally, there's no on&m responsibility on the school. So that is entirely in the hands of the PPA owner. They are solely responsible for making sure that the the system is um is operating and producing as much energy as we say it's going to. So again as I mentioned the cost implications of
047waiting uh the you know 26% this year takes 26% off the the total investment cost of 2 and a.5 million that the system owner um you know would would pay for next year drops down by 4% with it eventually stepping away. So um you know next year that PPA rate would be higher. Um, if you want me to go to the next slide, what I mentioned in the very beginning is that our savings does not account for the recent uh utility spikes that we've seen recently. And we've listed a few Ohio utilities here. Duke Energy being um you know the one that services Indian Hill um and you know what we've seen over the last 50 to 60 years for average prices of commercial electricity is a 3% increase but you can see here that
048this is you know this is unprecedented and it's gone way beyond that. So really, you should be able to see the savings earlier even though you're initially paying a higher per kilowatt hour rate with the PPA. So again, it's a way to hedge against that. And then, you know, as Kirk mentioned, this is a way for, um, you know, Indian Hill to really distinguish itself and as more Ohio schools um, you know, are implementing solar uh, on their campuses and then also using it as a way to enhance their curriculum. Um, this is a way for Indian Hill to, you know, um, you know, to accelerate and have this for the next, you know, several generations of students. So, we've got our highle roof layout. Um, this is a um it's a ballasted roof mount,
049no roof penetrations. Um you know again with you know half of the school um being still under construction this is uh you know these are the latest drawings that we um you know that we that we have from Moes and so we've come up with the system size of about 1.7 megawws throughout the campus which would supply about 50% of the total annual energy needs >> those panels visible from the parking No. >> No. >> How do you >> So the the ballasted roof mounts will have a just a 10 degree tilt. So it's it's essentially the same as you can't really see the you know like the color of the roof for an example from from the road. Um this is a this is a commercially you know wide used solution to um to
050flat and low sloped roofs that again don't require any roof penetrations >> um on that list is there any any schools here locally that this is on that we could go see >> Bethany schools. Yeah, Bethany is one of the schools that we visited last summer to check this out. And of course, Chris and MSA, they've helped to uh consider some of this design um with our new build. >> I saw Princeton on that list. Are they ballasted roof mounts? >> Yeah. So, there's a smaller um there's a smaller ground mount project that was recently installed um Lincoln Heights as part of Princeton's um within the district. It's a ground mount, so it is visible. So just to um just to summarize uh the estimated annual usage um versus the solar production, it would supply
051about 50% of the total campus energy needs at no upfront cost to you. The starting blended PPA rate would be about um 8.9 cents per kilowatt hour between the three schools. Um and then the the per kilowatt hour savings is actually closer to 7 cents per kilowatt hour. So, while yes, you're you're starting out at, you know, paying a a a slight premium to what your current electricity rates are, um, you know, eventually as we continue to see electricity prices go up. Um, you're going to then be locked into this locked into this price um with, you know, with the remaining of your energy needs still supplied by Duke Energy. So, is that the only downside or risk that we're looking at is an increased short-term cost? Is there anything else that we be looking
052at in terms of risks potentially? >> No. I mean, a PPA is a is a low risk um financing option that I would say about half of our customers typically use even if they have the cash available because again there's no ON&M responsibility. Um it's still a way to hedge against future electricity prices from rising. Um and they also achieve their environmental goals as well. >> Then how did you settle on the 50% versus 60 or 70 >> for energy offset? >> Yes. >> So we tried to max we try to maximize the amount of roof space given the current roof drawings that we have. Um, so if you know if we were to expand to for an example parking canopies that would help offset more >> and this doesn't impact our installation costs, labor
053that aspect of it. This is just materials or is it both? it. So the the price of the PPA that rate that you would be paying is a function of the full turnkey engineering procurement and construction of the system >> and we I believe that we've already approved adding the additional structural support to the roof to allow for this. >> Yeah. >> Middle school. >> Okay. Okay. So, do we have to then >> So, at the primary school, do we have to have any additional out-of- pocket cost to get the building ready for these systems or is that something >> So, that's something that that Moz is looking into as well. So, we would, you know, have as a part of this cost, we would we have the structural engineering. >> Um, >> but is
054that our risk or is that your risk? Uh, I mean that's that's our risk, but again, these are budgetary costs based off of what we've seen in the marketplace as of as of recent. So, you know, until um until we get to that final stage, then um you know, we would have to do we would have to finalize more of the the engineering and get the you know, get the contracts together to um really firm up the price. >> Do I have a timeline on that? Yes. So, um, how the tax benefits work in order for the PPA owner to monetize that this year and thus lock in this rate, um, we would have to get moving with contracts pretty soon because you have to incur at least five, the project owner has to incur
055at least 5% of the total project costs within this calendar year. Um, and in addition to that, there needs to be, so as a part of that 5% equipment needs to take delivery within three and a half months. We're located here locally in Milford. Um, and if needed, we can, you know, house materials in our um in our warehouse. Um, but as far as locking in this lower rate, things would have to move pretty quickly and finalized and moved forward, I'd say in the next in the next month. >> Does the installation of the panels probably more for Pete, would that delay you in completing the middle school or the elementary school renovations, or does that all just happen once you're done, then they come in? >> Once we're done. >> Okay. >> So, that
056that won't impact the overall delivery of the middle school timeline. >> Yeah. So, this would all happen once everything's completed and and again assuming that we could move forward with the entire scope of work that we've that we've listed which again would be on the existing Indian Hill High School roof um and then you know the the new um the new roofs that are being built >> I guess two things two questions um and then a piece of information be helpful for us for the future the on andm the the owning and management of that is that a 25-y year term on the presentation that we have. >> Yes, >> it is. And then one thing I believe that I I know the village uses a third party vendor to negotiate the electrical usage for
057the village. I know that we're part of that. >> I believe that we're not at the 544. I believe currently that we're at like a 498. Um, and that's for another year. So, it would be helpful maybe to rework the documents showing us that starting point versus the 544. So we when we look at that cash flow projection, you know, we've got a different starting place. And the other thing that would be I think helpful would be looking at historically and obviously we're in unhistoric times but looking back and looking at what is the uh rates that the village has negotiated because I think we're in a little bit different place in the sense that we're able to negotiate pretty substantial savings on our kilowatt per hours because we're included in that aggregate negotiation that
058the village does. So that would be helpful. But I do think you know obviously being forward thinking, having solar is all part of, you know, what the district believes in. But those would be from my perspective two pieces of information that would be helpful as we look at making a decision in the coming months. >> And who would be the the best person who has that historical data? >> Uh if you you can probably talk to um the city manager. She has that um I would think Dina. Okay. >> Dina would probably be able to get that to you, but I believe that like I said, I don't think we're at the five and a half cents. I think we're at like 49. >> You're just talking about supplier costs. >> That's correct. The supplier
059costs like when we got the cash flow analysis where you showed sort of, you know, where the cash flow break even is >> um using that 3%. >> It would be nice to be able to look back historically at what the village has paid compare that to the market so we have a better sense of >> you know how that looks. >> Okay. >> Thank you. I think the delta that you're mentioning there on top of that >> and back from a timing perspective if we were to do this we would need to do August meeting approve it at the August meeting I >> I think that's what I'm hearing in end of August uh early September at the very latest to move contracts forward And for our construction management, is that doable with everything
060else we have going on? Time >> wise >> time for us because it's happening, you know, after we're pretty much done. I would think infrastructure, you know, you could take that out farther, you know, we have a lot of work to do before we got to start worrying about >> getting the electric up through the roof and stuff. So, I think we have time. >> So, their timeline August really doesn't impact us. >> Any other questions? Anything else you want to point out on the slide deck? >> Nope. I I think that pretty much covers it. >> Thank you. Thank you very much. >> Thank you, >> Kirk. Anything else on your list? >> Uh, no. Just want to thank everybody who presented today. And again, for those who pay attention with the public uh
061meetings here, these are all educational uh presentations on the financing piece of the borrowing side for the construction project. That is totally separate from looking at this PPA agreement uh with regards to an environmental solar project. And just want to make sure if anybody has questions, they can feel free to ask me or Mick and we'll try to explain where we're at along the process because there's a lot of moving parts here with this construction project. It's a multi-sight project. Obviously, three important GMPs improved today, but we still have more design to do on other parts of this multi-sight project and we still have design to do on the environmentals. Um, so thank you all for presenting. That's it. Um, I echo everybody's thanks. This is a team project for sure. Um, with that, is
062there a motion to adjurnn? >> So moved. >> All All in favor? I >> I >> Thank you. Thanks everybody. Congrats, Lauren. Welcome to the team. >> I'll talk to you in a little bit. Everybody, you have to be