City won't use federal stimulus money for planned large-scale facilities improvement

May 7—The Kapszukiewicz administration doesn't intend to use any federal American Rescue Plan dollars to cover the $46.5 million cost to modernize seven city-owned buildings and will stick with its plan to finance the work by issuing bonds.

That's what officials told a Toledo City Council committee Thursday during a hearing about a proposed contract with Leopardo Companies to renovate city buildings with years of deferred maintenance in an effort to make them more energy-efficient. In the long run, officials said, the energy savings will offset the renovations' cost.

The contract calls for repairs to the Alarms building, the Frederick Douglass Community Center, Fire Station No. 1, Toledo Municipal Court, the Safety Building, the sewer and drainage facility, and the transportation building. The work will include heating and air conditioning upgrades, lighting upgrades, elevator modernizations, and the installation of backup generators.

The courthouse renovation is expected to cost about $17.4 million and the Safety Building work is budgeted at $13.4 million. The other projects should cost between $1 million and $5 million each. The contract also calls for modernizing city street lighting and creating an alternative-fuel plan for city vehicles.

Jeremy Brown with Leopardo told council many city buildings have key infrastructure that is past its useful life. For example, 86 percent of the city's mechanical systems are obsolete; 80 percent of the city's elevators need to be fixed; 75 percent of roofs are due for repair; 75 percent of its generator systems are outdated, and 63 percent of doors and windows need replacement.

The plan is to complete the renovations over a two-year time period while keeping each building open and operational, Mr. Brown said.

According to a schedule of projected annual savings presented to council, Toledo will save about $7 million in utility costs, $2.55 million in building-maintenance costs, and about $2.1 million in fuel costs between 2023 and 2043. But the bulk of the 20-year savings is set to come from avoided capital costs — savings realized because the city won't have to continue paying for short-term fixes when something fails — to the tune of $77.1 million.

Advertisement

Councilman Katie Moline said Thursday she was frustrated by the lack of detail provided about how Leopardo arrived at its savings projections. She also raised concerns about whether the new equipment would be obsolete and in need of repairs again by the time the bonds were paid off.

"When is the cost savings actually going to be a benefit to us? And then will the life of these improvements last through the time period of which we will be paying debt on this project?" she asked.

Mr. Brown said Leopardo calculated about a 25-year average useful life for most systems, though some last much longer. He also noted the project is required to provide benefits that outlast the debt service payments.

On the topic of finances, Ms. Moline also questioned why the administration doesn't plan to use some of the city's nearly $189 million allocation of federal coronavirus aid to pay for the improvements.

"We're going out to bond and increasing our debt when we are about to receive a big chunk of stimulus money from the federal government, and there's also talks of an infrastructure bill coming through," she said. "I think it needs to be addressed why we're not looking into maybe using those funds versus putting the burden of debt on the taxpayer for the next 20 years for this project."

Abby Arnold, deputy chief of staff, said the mayor did consider dipping into those dollars, but the U.S. Treasury Department has yet to issue guidance on how the money can be spent, and the project has been in its planning stages since 2019.

"We just felt as an administration that those Rescue Act dollars could be put to more impactful use in our community in other ways, and so we decided to continue with the plan as we had already set forth for this project," Mrs. Arnold said.

The last major facilities investment in city-owned buildings was in 1995 and 1996, officials said.

First Published May 6, 2021, 6:24pm