ABC 15 Investigates: Horry County energy positive schools burn through budget
Horry County Schools has approved a $240 million deal to build five new schools over the next two years. The original budget was set for $167 million. The final proposal was approved for nearly $73 million over that budget.
The Horry County School Board decided to build high performing, energy positive schools and chose the highest bidder to build them, a company called First Floor Energy. They threw out months of work with contractors on a traditional school model in favor of that energy positive design. They then rejected the advice of a consultant on choosing that company as its contractor.
Discussions about building schools came as early as a 2009 schools board meeting.
Over the next three years the board discussed several options, from changing attendance lines to building new schools.
By 2013, the decision was made to build four new schools. The fifth would be added later.
We've dug deep to find out why the board chose the most expensive option, and to see what's coming to Horry County, we toured one of the only other schools built by First Floor Energy that is considered energy positive: Sandy Grove Middle School in Hoke County, North Carolina.
The school has four solar trees and more than 2,300 solar panels on the roof of the building just waiting for the sun to come out.
The school's former principal said everything is energy efficient in the school, from the LED lights to the water system. A generator outside the school turns solar energy into usable power.
"They take the DC power from the solar panels and convert it into AC power and come back through these two transformers and back on to the grid," Charles Tapp, the Executive Director of Maintenance, said as he pointed to different parts of the generator.
Within the first month of opening the school was saving an average of $15,000 per month and that didn't include their energy buyback program where they make a profit off of energy sold to the local power company.
Horry County Schools are projected to save about the same amount, raking in an estimated $800,000 between the five schools each year.
We spoke with Santee Cooper to see if Horry County could participate in an energy buyback program like Sandy Grove has, but they said nothing like that exists in our area, yet.
The concept appears to have worked in Hoke County, but when brought here, to Horry County, under very different circumstances, will the results be so positive? For that answer we went to Robbie Ferris, President and CEO of First Floor, the company behind Sandy Grove and that was hired to build the five energy efficient schools here.
Ferris explained he built Sandy Grove in 2012 through a public-private partnership. His company owns the building and the school district leases it.
"Schools often lease parts of schools, but not often entire buildings," Ferris said.
That same kind of partnership is not legal in South Carolina, so for Horry County Schools that meant paying for the buildings in full, and that put them nearly $73 million over budget. The board set that budget, but now the chairman said he knew full well it was too low.
"I had no doubt in my mind that everybody was going to be over the budget we had set," Joe DeFeo, the chairman, said. "That was a done deal. There was no way anybody could build these schools for that amount of money."
But, there were two options that came a lot closer. One was $55 million less than the First Floor proposal. The other was $30 million less.
"The budget was not correct anyway. It was done a year and a half ago. There's been 25 percent inflation, which anyone can go online and look at construction costs," DeFeo explained.
WPDE ABC 15 went online and according to Turner Construction, a company that puts out construction statistics, inflation nationally went up about 6 percent in that year and a half.
"Given all of that they are still going to save money because these buildings will save somewhere between $65 and $70 million up to about $100 million over 40 years," Ferris projected.
The chairman says the other two companies left things out that would have cost the district more money later on.
"We asked for carpet on the floor. At least one of the proposer put vinyl on the floor. We asked for geothermal heat pumps. One proposer put residential DX air conditioning in," he said. "We asked for high performance schools. They did not provide it, so we asked for things they chose to try and control their costs instead of giving us what we wanted."
Throughout this entire process, a consultant was alongside the board, helping them to make the best decision for Horry County Schools.
The district paid that consultant $50,000 to lead the committee through the process.
In the end, a full report was provided at decision-making time that weighed cost versus benefit. The consultant rated First Floor Energy the lowest out of the three options, but the board picked it anyway.
We asked DeFeo why.
"Well, let me tell you how that decision worked because I didn't make the decision to hire him," DeFeo said. "I would not have hired him. That was not my decision. I called our attorneys and told them as far as I'm concerned we better consider whether we pay the bill or not."
They did pay the bill. WPDE ABC 15 was able to get a copy of that consultant's final report. In it, he draws issue with scheduling, budget, and design saying in part, "in view of the fact that other teams delivered high-performance/energy-positive solutions and did so at significantly lower cost, I do not believe this course of action represents an appropriate use of financial resources."
"I didn't expect him to come and tell us, tell a selection committee, what they should do," Defeo lamented.
We asked DeFeo, isn't that what consultants are paid to do?
"When you are building $150 to $250 million, as it ended up, but $150 million in schools, you don't just do this without consultants, without lawyers," DeFeo then said. "Private industry wouldn't do it. We would be foolish and stupid to do it. And my opinion as far as the architect, the consultant, that's one small piece of the puzzle. But you just don't do these things alone. If you do, you end up with protests, lawsuits and everything else."
Through this lengthy process that started in 2009, the board had never publicly considered energy positive options until one meeting in October of 2014. That's when board chairman Joe DeFeo brought in Robbie Ferris, the President and CEO of First Floor Energy. The two had met at a state schools conference earlier that year.
At the next meeting, one month later, the board votes to scrap everything it had been working on for the last several years to go with an energy positive alternative.
"You know, the main goal, it's great that we'll have green schools and I'm all for energy savings, but by no means am I a tree hugger. If this was going to cost the district money, if I believed it was in the long run, there is no way that I would go down this road right now," DeFeo stated.
In December of 2015, crews began clearing trees to make way for one of five energy positive Horry County Schools.
There were options for other companies to appeal the board's decision. By the time that appeal deadline was up, though, none had done so.
Now, it is up to the state to approve building permits. They have not yet been approved.
A decision is expected in the next few weeks.
The board chairman said the board plans to borrow the money through bonds to pay for the schools in hopes of paying them off within nine years. He said it will not cause a tax increase.