Virginia Beach looking ahead for energy savings

VIRGINIA BEACH

In a twist on the adage that you've got to spend money to make money, the City Council agreed to borrow $10 million to try to save even more in future energy costs.

The council decided Tuesday to authorize $10 million in debt - split evenly between City Hall and the school division - to invest in energy-efficient infrastructure. The idea is to install roofing, heating, cooling, lighting or mechanical equipment that uses less energy and therefore saves money over time. The concept is called energy-performance contracting.

"You're paying back what you invest," said Dave Hansen, a deputy city manager. "You're borrowing, but you're not spending any more."

Virginia Beach would hire a contractor to do an audit that suggests how a building can reduce energy costs. The company then installs energy-efficient equipment. The work is paid for with the savings on energy bills and if the savings don't

materialize, the shortfall is made up by the contractor.

"It's a guaranteed payment," Hansen said.

The Beach's eye toward energy comes as the city groans under rising fuel and electricity bills. City Manager Jim Spore wrote a letter Tuesday telling council members that energy costs in fiscal 2009, which began Tuesday, already are expected to be $5.6 million more than budgeted.

Hansen said there is no list of what projects the city would target first, but buildings that use the most energy, including recreation centers, are likely candidates.

The school division has projects scheduled to improve efficiency at eight schools, according to city documents.

The contracts will be part of a pilot program and will be reviewed after two years.

A similar plan was proposed for Norfolk's schools last year, but the City Council significantly reduced the program, citing concerns about the city's debt limit.

Virginia Beach dealt with that issue by not including the $10 million in energy debt against the city's self-imposed debt limits. Hansen said it makes sense not to count the debt in the traditional manner because, similar to money used to preserve farmland, it has a dedicated funding stream and isn't paid for with general fund money.

Patricia Phillips, the city's finance director, added that bond rating agencies might react positively to the debt because it shows the city is actively dealing with rising energy costs.

Council members made little comment on the contracts Tuesday, but Councilman Bill DeSteph suggested the city draft an overall policy to explore alternative energy sources. He focused

on offshore drilling options and mentioned solar and wind power. DeSteph added that those industries could also be used for economic development.

"Something like this would very much help with the approach recession proofing our economy," he said. "And not just Virginia Beach, but the whole region."

Richard Quinn, (757) 222-5119, richard.quinn@pilotonline.com