Board of Directors - Regular Meeting

for July 14, which will set the agenda for July 21. We'll first kick it off with our Clinton Sustainable Energy District update. As you all know, we entered into a memorandum of understanding with the Clinton Foundation to put forth the Clinton Sustainable Energy District. Made national news last September, I believe. And so Nick Sarpey, and I believe alongside INFRA, will provide an update. Nick, are you starting first or is it? All of them. All of them. Oh, they just put your name on there. Okay. All right. Well, Jordan Tinsley and Ed Tinsley, if you all would raise your hands. Yes, sir. Ed.

Jordan Tinsley from Infra.

They're not related.

Very much related. We'll get to that. Good afternoon. It's great to see everyone. We appreciate this opportunity to address the board about an exciting project that we've been working on with various stakeholders for over two years now, and it's good to start to see some things take shape in this regard. This is a bit of a disclaimer that our attorneys require us to include, and the biggest takeaway for Tom's sake is that we're not giving you legal or accounting advice. Um, I would try to make more humor around that, but I'm sure our attorneys will get mad. So there's a few things we want to cover. We want to give a little executive summary just to kind of help get everybody oriented, remind them about the project, talk a little bit about who is Infra, even though Infra's second largest office is in Little Rock. Some folks maybe still aren't familiar with us because we underwent a rebrand in May of last year. We were formerly known as Bernhard. I want to talk a little bit about what is a sustainable energy district as a concept. Talk a little bit about energy as a service, which is the financial tool that we're hoping to use to really build this energy district. drill into the actual scope of improvements that would be funded and financed through this partnership and then talk in more detail about the financial and operational benefits that it will bring to the city and then finally look at some next steps to get the transaction and the partnership formalized. So any questions or concerns about that agenda before we kind of dive right in? Yes, sir. So just quick introduction. My name is Jordan Tinsley. My title is Vice President of Development. I'm an attorney by training, but over the last several years working at Infra, I've had to take kind of a crash course in accounting, finance, any number of disciplines that relate to energy as a service. I'll let Ed introduce himself when he comes up. He's going to talk a little bit toward the end of the presentation. Essentially, what we have envisioned here is an outgrowth of a project that we've already started with the Clinton Foundation, work that's ongoing at the Clinton Presidential Center. And the idea is to create a sustainable energy district in downtown Little Rock that can supply cooling and heating to private entities, municipal entities, nonprofit organizations, any other entity that's located in close proximity to the river market and that area downtown. This is not by any stretch of the imagination a new or novel idea necessarily. There's one in Nashville, Tennessee. There are energy districts all along the coast where there's a little a little bit more emphasis on sustainability. So they're a little ahead of the curve on adopting some of these models. Same thing on the West Coast. But this model is really starting to kind of move globally. There's an initiative at the UN with regard to sustainability ability to kind of advance this sustainable energy district model globally but we are hoping to use a financing mechanism that infra has innovated over the last several years generally speaking since about 2014 called energy as a service in order to finish creating the sustainable energy district and so I The energy as a service partnership that would create the sustainable energy district is a fiscally responsible method of addressing what are otherwise really pressing thermal infrastructure needs that the city already has. And we'll talk about that in more detail. But essentially what the partnership contemplates is that the city would monetize what are otherwise illiquid assets, chillers and boilers and thermal production equipment that sits at the State House Convention Center, across the street at the Robinson Center. And effectively, infra would pay for the city for a right to use those assets to essentially supply chilled water and heating water to the sustainable energy district. So effectively the city is conveying a right to use those thermal production assets And we are compensating the city for that through an advance payment where we essentially accelerate the consideration for that right to use over the term of the energy as a service partnership to the city. And then there would be a balance of that amount which we refer to as the net advance payment that the city could retain and use at its discretion. A portion of the advance payment would need to be reinvested in energy and infrastructure improvements required to operate the district, which we will talk about here in just a minute. But this is going to make the city's thermal infrastructure more efficient. It's going to reduce the greenhouse gas emissions associated with operating that thermal infrastructure, which dovetails with the recently adopted sustainability action plan that the board approved not too long ago. It addresses deferred maintenance and capital renewal, again pressing energy infrastructure needs that the city is going to have to confront one way or the other. It creates excess thermal capacity to enable future growth. We've had a lot of conversations with LRCVB about maybe trying to expand the Statehouse Convention Center in the future. There's also an operational risk transfer component where in this partnership, infra will essentially cap the cost of operating and maintaining select energy infrastructure assets. And if those assets fail prematurely, meaning that if they fail prior to the expiration of their industry standard service life, which we derive based on third-party sources that are really reliable, then infra bears the risk of renewing that equipment. So if there's an unplanned failure of equipment, we would renew it. and take on that risk that currently the city has in the status quo. I don't know how familiar y'all are necessarily with some of the thermal infrastructure needs the city's confronting, but we'll go into that here in a minute. And then this would also improve substantially the resiliency and the reliability of some of the city's critical infrastructure like City Hall, like the Annex, like the Statehouse Convention Center. all of those facilities would be capable of fully operating in the event of a loss of the electric grid after some of the improvements that are contemplated here. And then the last advantage of this financing structure energy as a service is that it allows the city to finance these improvements without putting debt on the city's balance sheet. And it also preserves the city's credit quality. And we've proven that with At this point, over 30 transactions that we've done in the healthcare and higher education sector over the past several years. So this is just kind of a quick rundown of some of the benefits to the city that we'll talk about in more detail as we move through the presentation. But I'm going to talk real quick about who is Infra. So Infra has actually been around in some form or fashion for over 107 years working on mechanical and electrical infrastructure. I've heard stories about how we had folks way back in the day that were driving, you know, horse-drawn carriages with huge ice cubes. into commercial buildings like way back in the day. Obviously, the technology has gotten way more advanced. And since 2014, we have been focused on this energy as a service model. And you can see there on the right side, since 2017, when we closed our first energy as a service partnership, we've actually done over $4 billion in financing through those partnerships. And at this point, you can see on the left hand side of your screen, we have over 200 million square feet under active management by Infra where we are saving utility costs on a minute by minute basis for our customers. I would be remiss if I did not mention that as it says we have 25 plus offices across the United States, but you'll see that green dot right in the middle of Arkansas. That's right here in Little Rock where I work. Second largest Infra office is right here in Little Rock. And that's as a result of a company called Tinsley Mullen Engineers that has been rolled into infra and has a long standing track record of providing these types of services in Arkansas. So what is a sustainable energy district? So it's essentially an area where the production of heating and cooling are centralized and then distributed outward to buildings. So you see this really often with healthcare systems or higher education institutions where there are campus style facilities. And they will have a central energy plant where chillers and boilers and other equipment is located. And then through piping networks, they distribute that. you know, conditioned water out to buildings in order to provide heating and cooling to those buildings. And so there's obviously an economy of scale that comes with centralizing that heating and cooling operation and then distributing it outward. And over the life cycle of a heating and cooling system, this is far more efficient than like a building level heating and cooling system, like a split system or an air conditioning unit that you would see at the building level. So what do we have in mind here? You can see on the right side, number 1 and 2, we have, as I said, already consummated a partnership with the Clinton Foundation where we have active work ongoing at the Clinton Presidential Center and the One World Complex, previously known as the Heffer Building, which the intent, as I understand it, is to move the Clinton School into that building. But we are doing work to effectively interconnect the mechanical rooms at those two facilities and turn them into a plant that will be dedicated to the energy district. And then the remainder of these dots are what we've been working on for the last several years with stakeholders with the city is a plan for how can this energy district address the city's critical infrastructure needs. And so you'll see one of the plans we have is to actually interconnect number three and number four to the chilled water assets at the Clinton Foundation, where you see one and two, so that they will be able to get cooling from the energy district. The Museum of Discovery has HVAC system that is I would venture to say about 30 years old, and it's on its last legs, overdue for replacement. They have a critical need. And then as you're, I'm sure, very familiar with the Ottenheimer Market Hall, the plan is to renovate that facility, which is going to add square footage to it. They're going to need additional cooling infrastructure there. And so it makes sense to try to address that through the Energy District. Finally, you'll see dots kind of five through eight down on the left side of the screen. The plan is to interconnect Robinson's chilled water system with City Hall and the annex, and to essentially make that a loop system. And then we're going to do some improvements inside the State House Convention Center. To interconnect the two different chiller plants that are inside of that building. And then we are going to install some generators in that location across the heart. That will allow the city to take a certain type of electricity service called the interruptible service. That's about a third of the cost of the electricity that is purchasing right now, which is where a substantial amount of the utility cost savings comes from. So just real quick, I want to reiterate how the energy as a service structure works. We provide an advance payment to use the city's assets. This is not a sale of the assets, okay? We are acquiring a concession of the assets is the legal terminology. So the city retains book and title ownership of that equipment, but we're paying for the right to use those assets. And then the second step is that the city would enter into a design build agreement to make those energy infrastructure improvements. that we'll discuss in more detail with the remainder unrestricted cash for the city to deploy. And then finally, there's an ongoing operating expense that's paid back to Infra for thermal services and for the operating and maintenance costs associated with running the equipment. We talked a little bit at the beginning about that accounting outcome. And so this is a major advantage of this structure that a lot of Infra's customers, previous customers really appreciate. Because that ongoing payment for thermal services is treated as an operating expense, like a utility bill, the financing for the improvements is essentially a non-debt liability. And so, INFRA has actually discussed this with the city's auditor, FORBIS, and they've generally agreed with the accounting outcome where the upfront consideration, the advance payment would be recognized ratably over the term as operating revenue, and then the thermal services payment is an operating expense. It's not treated as debt service. And then we've gotten similar positive feedback from the rating agencies. So the majority of them are going to recognize some kind of profit and loss benefit from the recognition of new revenue associated with a transaction like this. And then they see it as strengthening the balance sheet and also mitigating operating risk. As far as I'm aware, out of 30 some energy as a service partnerships that we've done now, we've never seen an outcome where the credit quality of our counterparty deteriorated. I'm going to turn it over to Ed at this point to introduce himself and talk a little bit more about the project. Thank you all so much.

Well, to clear up any confusion there may be, I am actually Jordan's father, so he and I have worked together quite a bit on this project. I was one of the original founders of Tinsley Mullen Engineers. Jordan mentioned that earlier. I also served as the Chief Executive Officer of Infra from 2017. My current role now is an advisor to infra. I have served on the board. I'm no longer on the board of directors of infra, but I am still the largest individual investor in infra. So very much involved in infra on a day to day basis. The scope of improvements that we're proposing for the city of Little Rock is actually very similar to the scope of improvements that are already underway with the Clinton Presidential Center. You can see that on the left, the upgrade to chill water and heating water systems. We're going to be upgrading that to achieve optimum energy efficiency, reduce the load to create spare capacity for future growth. We will be replacing some aged equipment at the Robinson Center that's immediately in need of replacement. That's actually work already underway through a separate engagement. We're going to interconnect the Robinson Center and City Hall. Jordan mentioned that when he was looking at the map. interconnect both the plants in the West and the East Plant and Statehouse Convention Center. We're going to install the right metering for chill water and heating water service so that we can allocate costs correctly to the city of Little Rock and any third party off takers that might take service from the district over time. Jordan mentioned the aged air handling system at the Museum of Discovery. We'll be interconnecting that to the Sustainable Energy District, serving it from the east side or the Clinton Presidential Center initially. Now over time, we anticipate those two connections, both the east and the west plants will be interconnected. We'll also be connecting, interconnecting the Ottenheimer Market Hall in the same fashion. In addition to all of that work, we're going to be performing some immediately past due repairs, implementing a preventative maintenance program, compiling spare parts and tools inventory, and developing a plant operating manual. Moving now to the right, Jordan mentioned the increase in resiliency. So right now, if you've lost electric power from the grid, you would only have power available to do exit lighting, life safety needs. You don't have enough to power air conditioning or broadly use the Robinson Center or the Statehouse Convention Center. When this project is finished, you would have the same benefit you already have. But in addition to that, within approximately one minute, the power would come back on to everything. So the State House Convention Center, Robinson Center, City Hall would be able to function as they normally would, even in the event of, say, a long term utility outage like an ice storm, which we've had several recently. We're also mentioning the measurement and verification of savings is something we would do because we're going to be guaranteeing the savings. We're anticipating that these improvements will reduce your utility costs for roughly $3.5 million a year by approximately $1 million. So we're going to guarantee that $1 million reduction, and we're going to install all this software and metering that we need to make sure that that's properly measured and verified. You can see the data analytics and fault detection platform. The purpose of that is to sustain those savings over time. You're going to need a lot of those analytics to identify faults. Right now, when something fails, it's more or less looking for a needle in a haystack. With the data analytics and fault detection platform, it would automatically identify that. We're going to train the plant operators to operate the equipment as efficiently as it can be. And then lastly, we would be optimizing all of the utility rates and riders that you have on the natural gas, electricity, and water accounts, making sure that each account is on the optimum rate class and rider selection for that. Any questions about scope of the improvements before I move on? The financial benefits, Jordan's already mentioned some of those on the executive summary. The main advantage, we think, is addressing some very pressing infrastructure needs. You have approximately $18.5 million of, I would say, past due or at least current due. capital renewal and deferred maintenance so you have a backlog we're going to whittle that down by 18 and a half million dollars it will provide unrestricted cash by monetizing what would otherwise be considered illiquid assets through the concession agreement that jordan mentioned it does transfer the premature failure risk in the event we use the equipment and it fails prior to expiration of that standard industry industry standard service life we would be replacing it as opposed to the city It does transfer any risk associated with higher than forecast operation and maintenance costs. So if repair costs are high or for whatever reason the O&M costs are higher than we anticipated, that risk is borne solely by infra. It also mitigates the risk of higher than forecast utility costs. If you think about it, you've already invested heavily in a solar PV array, 4.9 megawatt solar PV array that will roughly serve about 70% of your needs. That array erases the energy charge that you would otherwise pay energy. With the improvements that we're making, we'll be erasing the demand charge, which is the OIS or the Interruptible Service Tariff Rider. So you're essentially either mitigating or offsetting nearly 100% of your electric bill. It avoids $1 million in purchased greenhouse gas emission offsets. We really applaud your sustainability action plan, which calls for a carbon neutrality by 2030. In the event you don't do this project, you would have to acquire purchase greenhouse gas emission offsets to meet that goal. In the event you don't get there by 2030, this eliminates a million dollars of that. It does provide two new revenue sources. One of those is that advance payment that Jordan mentioned. So that advance payment would be treated from an accounting perspective as revenue. And then also you'll be realizing revenue from the sale of the chill water and heating water to third party off takers as well over the term. We also believe it will be a very low cost infrastructure opportunity for those that choose to locate their facilities in downtown. And so it would therefore promote economic redevelopment by providing or reducing the cost of otherwise building those facilities downtown. It preserves that capacity as Jordan mentioned earlier because of the accounting treatment. Operationally, I've already mentioned the resiliency benefit, 100% backup power to those facilities. It also provides additional resources. So the engineering team of Infra would be working closely with your staff to ensure that we optimize equipment operation. I frequently say this, but getting energy savings isn't the hardest part of the job. If you have the expertise and the resources capital to do it, you can get them. The much harder part of the job is to sustain those savings over time. So additional resources to do that, increasing reliability and resiliency by interconnecting the plants. You're sharing redundancy, so in the event one plant fails or a piece of equipment fails in one plant, that load is automatically going to be served by another plant. It does reduce natural gas, electricity, and water costs, again, roughly a million dollars a year. I mentioned already the data analytics and fault detection platform. Spare capacity for future growth, we're very familiar with your master plan and your plans to grow. It provides capacity in the cheapest possible way by reducing the load. I frequently say that, that the cheapest form of any capacity for future growth is to reduce what you're currently using. That creates spare capacity that's now then available for future growth. It aligns very favorably with your downtown master plan. And when combined with that solar PV array, we believe it firmly establishes the city of Little Rock as the municipal leader in the United States as it relates to energy efficiency, renewable energy, carbon footprint, and economic development. The next steps, this is just a quick overview of some of the next steps. The first step obviously is to approve the ordinance allowing a sole source procurement with infra. It also includes additional validation of the project scope. We're still working with the city staff to ensure that the scope of work is exactly what it needs to be, no more, no less. We also need to work with your financial advisor to validate the financial outcomes. Also with four of us, Jordan mentioned on the accounting treatment. The credit, we will do a synthetic credit analysis work with the credit rating agency to ensure that it does not compromise your credit quality. And then also from a legal perspective, compliance with all applicable statutes, ordinances and regulations would be the first step. The next step would be to negotiate the contract, obtain all the required approvals, and then execute agreements. We're anticipating that the financial close could be as early as November 1st of 2026. And that would be what we'd call the financial close date. After that, you would then transition your operation and maintenance responsibilities from the city of Little Rock to infra and a commercial operation date when we would assume the operation and maintenance responsibility would be on December 31st, 2026. And then after that, we would begin the design, construction and commissioning of all of the improvements that I mentioned. We're anticipating that would be roughly a two year period of time. Any other questions?

Comments? All right. Board members, any questions?

Okay.

Director Heinz. So is the payment to the city already set or is that yet to be determined?

Yeah, we're still negotiating that, Director Heinz. Um, so the There's a couple things that are in flux. Um, we recently learned that the second chiller at Robinson has failed. The compressor on that machine is is now broken. So we're now evaluating whether to add some scope related to that which could change sort of the pricing for some of the improvements and that's more complicated than it sounds because one thing that we may decide to do is instead of replacing that chiller in place where it's on the roof of Robinson now is to go ahead and put it in a central utility plant. So we're evaluating whether to go ahead and build that and replace that chiller in a central utility plan or to replace that in place at Robinson. And then the other open question which there's ongoing discussions with you know the city's policy team and its financial advisor with regard to what should be the magnitude of the net advance payment, the amount of unrestricted cash that the city can deploy at its discretion. Depending on the amount of improvements that are done, there's really kind of some headroom in the advance payment to create additional dollars, you know, that the city could fence could either invest and earn on or deploy, you know, to generate another valuable return. So we're still in conversations with the city and its advisors about how much of that, you know, would be desired, I guess. So that's not set. The limit there really is what's the fair value of the assets. And so we use a really complicated economic model to derive the fair value of the assets. But because this is really kind of a financing tool, the city has to decide, okay, up to that limit, how much monetization do we want to do? That's really not infra's decision. So we're still in conversations about that.

So I guess my short answer to the mayor and city manager is Are we going to be aware? You're asking us to pass an ordinance. Are we without being aware of what that payment is? So how do we handle that?

No. And I've actually what we've shared again, um, one that nothing will be done, um, before this without the city board's approval. That's number one. Number two, we don't know the actual number yet. Uh, but what we did share last year again, when I say this number, This was a different number last year because of the complexities and other things dealing with the assets and the value of part of it. I think last year, the number was somewhere around 40, $45 million of which a good portion that has to be reinvested back into the capital assets of the Robinson and things of that nature. So that was the number. Then the number is a little bit lower, but depending on our financial advisor, which is Stevens, what they say that's doable. Because again, even though it's not on our balance sheet and does keep us protected from the Moody's and the S&P standpoint, we still ultimately want to be comfortable from the Stevens end on what that number is. Once we get that number, we will share that number. But ultimately, that money majority of, when I say that number, 40 million, 30 million, a significant portion that has to be reinvested into the capital assets because we want to ensure that we take care of those assets as we move forward. And anything that's left, he used the word unrestricted, and we've always talked about the word unrestricted is unrestricted, but nothing gets paid. There's a lot of things that are unrestricted that's part of Public Works budget. However, there is commitments to those things that different city board members have had. I say that as an example. that whatever that pot of money is, it has to go for you all before it's spent, allocated, or anything done with it, and we'll get that information back to you.

So basically what you're saying is before, when we get the ordinance, we'll know the number? Yes. Okay. That's what I was asking.

And I want to be clear. I mean, I'm not trying to hide the ball at all. We just don't know the number. We're still negotiating.

That's fine. The number is somewhere around, last year was $40, $45 million. We'll figure out what the actual number is. It's going to be multiples.

And again, it's in that general ballpark. I mean, it's going to be somewhere in that ballpark what the advance payment will be.

And then most of that has to go back into the assets. So it's not, we're getting a windfall, but it's not a windfall you think.

Again, we're constrained by what's the fair value of the assets. Otherwise, that accounting outcome that everybody, I think, would desire is in jeopardy because the auditor might say, OK, well, what you paid for these assets is way beyond what any normal, reasonable person would pay. And so we're going to treat that as a loan. That's not what we want to happen.

And also what I want to share, I think it's prudent for all of us, as we know, while these may be city owned assets, Most of these assets are managed by the Little Rock Conventional Business Bureau. This gets them out of the energy business, creates more efficiencies there, and economies of scale as they move forward. We're not getting rid of Grant and his team, but they are very much, you said dank, but they'll still be involved with our assets.

And I guess that begs another question. So we talk about those, but we do have a private We have private entities that are on a ground lease with us with Doubletree and Marriott. Would they be one of the customers you would sell?

We've had conversations with the Marriott.

I'll take that. Yes, sir. The short end of the question is they have been approached right now. It's not financially conducive on their end to do it. But we do think long term they will more than likely consider coming knocking at our door. But right now, no. Because they're maintaining their own assets, right?

Yeah, and just to be clear, all the financial analysis is evaluating the transaction as if we're just going to honor the existing lease with the Marriott, whatever those obligations are. That's the direction we've gotten from the city's policy team.

Director Miller.

Thank you, Mary. Excuse me, you've answered several of the questions that I had. Let me ask you, Who determines the fair value of the assets?

Yeah. So ultimately, the auditor, the city's auditor for this will have to kind of verify that determination. Infra makes a stab at it, utilizing a very complicated economic model where we essentially say, OK, let's simulate what we could do with the assets if we put them in a district energy system, when we sell the spare capacity to off takers. So we have to do feasibility analyses where we evaluate, OK, this is what This is a potential off taker. This is what it might cost to interconnect them. These are the revenues that we could generate from selling them chilled water over the term out of the excess capacity. And then we kind of deduct those expenses from the potential revenues. So it's a pretty complicated economic model where we're effectively saying This is the revenue we can generate over time. This is sort of the net present value of that revenue. And so that's the fair value of the assets to infra. An important point is that that fair value determination is really going to be way higher than the book value that you're currently holding for the assets. you know, whatever the book value of the assets is, let's say this is an asset you bought 10 years ago, there's been some depreciation system employed, the value of that asset for the city's accounting purposes is nowhere near what the advance payment would be valued at. I know this is getting really complicated, but effectively we would make that determination then it's validated by the city's financial advisors and auditors. but it's based on a very reliable economic model that we've reviewed with the city and its policy team on several occasions already.

The overarching authority on that, Director Miller, is GASB. the Government Accounting Standards Board, and they published a guidance on how that has to be done. So we would be following the GASB guidance.

OK, so we we know what that's going to be.

Yes. Yes. We've already completed that first analysis and have reviewed it with four of us. And as Jordan mentioned, without saying they've agreed to it, they generally accepted it as being in accordance with the GASB guidance.

So are you guys like Johnson Controls? Is that one of your peers?

In a way, so Johnson Controls is what I would consider an original equipment manufacturer because they sell York chillers. They are not equipment agnostic like Infra. We don't have an allegiance to a particular product, right? Same thing for their controls. They are a controls manufacturer. Whenever a JCI comes into a building, they're not trying to find the optimal equipment selections. And I'm not trying to be negative about JCI, but they're trying to sell you JCI products. That's not what Infra does. We are an energy optimization services firm. We don't have an allegiance to any product other than that data analytics and fault detection platform that we have to utilize to measure and verify the savings that we're guaranteeing to our counterparty.

But to be clear, Johnson Controls does offer energy as a service arrangements.

Okay. So it's sort of like your peer. Yes, sir. I mean, they are a competitor, but we think that we differentiate ourselves in the market from them because, again, we're not going to come in and sell you strictly JCI products. Okay. Thank you.

You talked about a guaranteed reduction. Yes, sir. What does that mean? You you pay the city? Yes, sir. In advance on that.

Not in advance. So there's there's a reconciliation. So we talked a little bit about measurement and verification. So part of what we're going to be doing is installing a software platform that lays over the building automation system for all the facilities where we have obligations. That is going to record the amount of utility cost savings over a period of time. Generally speaking, we do an annual reconciliation, although that's also negotiable But on an annual basis, we will essentially calculate here's the amount of utility cost savings that we actually realized relative to the amount that we guaranteed. And if the actual utility cost savings fall short of the guarantee, we cut a check as simple as that. We cut a check for the shortfall on an annual basis.

And, you know, the map that we looked at, it showed potential site. So we hadn't nailed down

Yes, sir. And the reason I'm saying that is because we haven't finalized a deal. You know, everything you're seeing on this screen is something we would do as part of the scope that's already agreed to. There's some additional scope that is still in flux, as I said. But what we're showing you today is what I would anticipate will be in the final proposal.

Just to add to it, the way that we calculate the savings would be in accordance with a very detailed international performance and measurement verification protocol. We would follow the industry standard and also the city would have the right to retain an adviser to review that a third party every time there's an annual reconciliation. And the other thing I would add is we would measure and verify the savings actually on a daily basis. So we actually produce a daily scorecard. We'd work with the city in the event of some disruption to the savings. We would actually immediately deploy the team needed to diagnose and correct the problem. So we're not going to wait to the end of the month. or the end of the year and get an, you know, what could be an unfortunate surprise.

Thank you. And I don't want to go on with this in the weeds a little bit, but certainly I think you talked about who's going to maintain the assets and you're going to have responsibility for that. So I guess from a city standpoint, what happens to our people in public works that would be doing that work now. Is anybody going to? No, sir.

There's no domain. Nothing happens with the Little Rock team members. Actually, the service is probably going to be enhanced because of some different benefits they provide. But there will be some changes with LRCVB. Again, they want to get out of this business as they move forward.

That's correct.

I mean, make it clear that we would intend to fill gaps. In other words, the existing team would stay in place. We would use our resources to fill any gaps that might be there. And then most probably most importantly, we would still retain overarching responsibility for the O and M. So the event of a problem, we would still be our problem. Does that make sense? We wouldn't come back to the city and say we didn't made our savings guarantee because you didn't operate it properly. Unfortunately, that has occurred in the industry. And that is not at all what we would do. We can't use that excuse. So we would keep the overall responsibility, but be working with the existing team, filling any gaps that are out there.

And we get similar inquiries all the time, you know, about is this an outsourcing? It's not an outsourcing. We call it a resourcing because generally speaking, everything that we're going to provide to the system is going to supplement the existing workforce. Now, we actually may pay the city to lease some of that labor if we need some of those folks to do boiler rounds or to make some routine repairs. But fundamentally, we're going to put an asset manager here on site that will be sort of responsible for managing and operating the assets in cooperation with the city's existing team. Now we have ongoing discussions with LRCVB about the to the mayor's point, the extent to which they want to over time. transition away from having to operate and maintain energy infrastructure inside their buildings. So those conversations are ongoing. But I don't at this point anticipate any kind of reduction in force or job loss or anything associated with the project. Okay. Thank you. Thanks, sir.

All right. I think that's all the questions from members of the board. Thank you all.

Yes, sir. Thank you.

All right. We'll now have Maneesh give an update on Go ahead.

Good afternoon. I want to give you all a quick update on the Markham Street pedestrian bridge in front of the blind and deaf school, which is located at the intersection of Denison and Markham Street. As you all are aware, yesterday a dump truck collided with the bridge, causing substantial damage to the structure. We closed off the street and put in place detours for traffic last night. The police department as well as public work staff worked to do that immediately just to ensure public safety. First thing this morning, we had public work staff meet staff from Arkansas Department of Transportation who were kind enough to send their bridge maintenance staff to inspect the bridge for us. They had their drone crew out there taking close up pictures of the damage and they provided that information to us. And currently we have a structural engineer who's reviewing that information and preparing a report for us to review. So those recommendations will help us make decisions in the very near future. As of now, we expect that report to come in this afternoon. We'll be reviewing that report tomorrow and we'll have more decisions and more information to share with this board. sometime tomorrow. As of now, the street has been closed. There's a detour in place. We also have all the sidewalks and the bridge closed off. So that's the update that I have right now, and I can answer any other questions that the board has.

Thank you.

Thank you.

All right, members of the board, we will If you'll please look at the modification and the consent agenda. Any questions? Any questions? Yes. All right. Any questions on the planning items? Director Miller.

Thanks, Mayor. I gave Brad a heads up that I want to have a presentation on items in Ward 1. I think that's 11, 15, 17, 18, and 19, I guess.

Yes, sir. I think it changed on the agenda.

I had to go back and rearrange. But what you did, what those are 10, 14, 16, 17, 18, and 19. So I'll start with number 10. So number 10 is Z8987-A. This is an applicant request to rezone the .16 acre property from R4 to PDR to allow for the construction of two single family residences. This is located in Ward 1. Planning Commission voted 11 yes, 0 no with 0 absent. Staff recommended approval as well. This is a proposal to replant these into two separate lots. This again for the construction of two attached single family homes. There will be around 741 square feet each. All of the ones that Mr. Orndorff has tonight, I think he has five of them, they'll all be for seller lease. Just I'll say that once and it'll be applicable for the rest of them. There's mixed use zoning in the area. All of these are or these are considered double frontage lots, one on Geyer Street, the other on 17th Street. Setbacks 15 feet from 17th Street, 20 from Geyer, five on the side. There will be off street parking for each of the residents along 17th Street and they cannot park across the sidewalk.

Now, when you say attached, it's like they share a wall. Yes, sir. They share a wall.

It would have to be fire. It had to be fire rated because they will sell those individually.

It'd be like a townhome. So it's like a duplex? I'd say it's more like a townhome. Okay. Duplex you rent, townhomes you buy. But he's going to rent or sell them? Yeah, he's going to rent or sell them.

Yeah. Okay. All right. Thanks. And it's off street parking on both of these?

There are. Perfect. Okay. So on to number 14. So number 14 is Z10283. The applicant requests to rezone the 1.20 acre property from R4 to PDR to allow a townhome development that is located in Ward 1 Planning Commission voted ten yes, one no, one absent. Staff is recommending approval of this one. Again, the proposal calls for the redevelopment of the total of 18 town homes. That would be two three unit buildings and three four unit buildings. All the town homes will have a driveway with a single car garage with additional parking on the driveway. Due to the platting issues over the years, there were some issues with the parcels being landlocked. So while we thought that and the developer as well thought that this was a creative solution to allow a little bit more density here in Ward 1.

Yeah. The parking on that. How many units are we talking about? There are 18 units. So it's going to be 18 units with two bedrooms? Probably so. And so that's, and we got parking for how many cars?

Parking for a car in the single car garage and parking on the driveway.

Now, I guess at the first, one of the first hearings there was an objector. No, there was not an objector. One of the planning commissioners pulled it from the consent agenda. You know why they pulled it? I could not guess. That's fine.

But you hadn't talked to any of the I guess none of the neighbors have expressed any concern about this.

Well, I believe there actually was. And I think Mr. Fogelman can probably clear this up next week. But this got deferred a couple of times. He worked with the neighbors. I think there was a couple of objectors originally. But by the time he came to Planning Commission, none of the neighbors showed up.

So he did his due diligence. So Mr. Fogelman would be the person to talk to on this?

Yes, sir. Thank you. All right. Number 16. Not Mr. Orndorff on that one.

It's Mr. Fogelman on the one you just talked about. That's right. That would be number 14. Mr. Orndorff on the rest of them.

Yes, Mr. Orndorff on the rest of them. Okay, go ahead. Okay, so number 16 is Z10304, the applicant request to rezone the .10 acre property from R4 to PDR to allow for the construction of two single-family residences located in Ward 1. There was 11 yes, 0 no, 1 absent or 0 absent, excuse me. Staff has recommended approval of this one. I'll say also, Director, that number 16, number 17, and number 18 they are very very similar projects i mean the site plans are very very similar the driveways are very similar they're similar in size so um i'll Present this one and I guess it can act as the others. That's fine. If you have any questions we can go through that too. Again, it's going to be developed, attached single family lots. There's a mix of zoning in the area. The lot area for lot one is around 2,100 square feet. The other lot is nearly 2,200 square feet. There will be a one car garage. And again, all these we've put in the staff report, the sidewalk, you know, we had some issues with that a couple of years ago.

The same way, same thing for 17 and 18, same way. So we're making them build sidewalk, right? I think there's already sidewalk existing there. Yeah.

And so I recall the issue that we had. Can't block it. Okay.

But we made, we kind of created that problem. I think that problem was created by us, yes. Yeah. So, these are like... But we remedied that. You did. And we learned from that lesson, right?

Yeah, you did. Thank you very much. These houses are about a little over 800 square feet. Yes.

One bedroom. I would assume, you have to ask Mr. Orndorff that. I think he usually goes for two and one. Try to do two bedroom, 800 square foot houses. You would have to ask him. I'll ask him. Yeah. I'll ask him. But no, I mean, it's all off street parking. All off street parking, yes, sir. On all these, it's the same way.

None of these are proposed to have only on street parking. There is off street parking on this one. And the final one that you had asked about is number 19. Now this one's a little bit, this is a little bit atypical than what we normally see. It's not, they don't share a attached wall. From the residential structure, the attachment at the property line is the garage. And there has to be a two-hour fire rating on that as well. So there will be a one-car garage on the western portion of the property and a two-car garage on the eastern portion of the property.

And they can be sold individually?

Yes, sir.

One will be a two-story, the other one will be one-story.

Okay. So all these are Mr. Orndorff. I can visit with him about those. Yeah. That's all I have. Thank you.

Yeah, no problem.

Director Adcock. Here's item number 15. Haven't we had this before us before?

Let's see ma'am, this is a rezone. I don't know if we've had it before this before, but we've had something similar. It's just a straight rezoning to R4, a two family district. The lot right now, it's undeveloped, so I would assume that it's for future development. They didn't say necessarily what they were going to do with it, but rezoning it to R4 probably means they're going to do a duplex.

Okay. They're going to build what on it?

Probably a duplex. It's for two family. It's just a straight zoning. So it would be a residential structure on that lot.

Okay.

So it will be a duplex?

I would assume so.

A rental property?

I would assume that as well.

Okay.

Thank you.

Any more questions on the planning items? Any more questions on the planning items?

I have one on item 20.

Yes, ma'am.

Oh, I'm sorry. It wasn't 20. It was 22.

Yes, ma'am.

And what what is this about?

22 is the bonds on the wastewater. Yes.

Oh, OK. Thank you.

Thank you. All right. Any more questions on the agenda? Any more questions? I want to also make sure everyone sees 21 on the agenda that is setting forth the design team for the 30 Crossing Park that will utilize the Bezos Earth Fund dollars. Just make sure everyone saw that. Any questions on that? Leland, how about you just give just a brief update? And clearly Tom and our city attorney have declared it a sole source, so just want to make sure everyone's aware of that as well.

Good evening, Mayor, City Manager, and City Board. I haven't had a chance to discuss this, so I just want to say appreciate and thanks to the Bezos Earth Fund for this $30 million donation grant for our project for the 30 Crossing. You asked me just to give a brief understanding. Sasaki. Yeah. So Sasaki has helped us with the master plan so far for the 30 crossing. They were selected through a bid process for that process and other consultants were utilized in that process for that master plan. So currently we have a master plan and now we need to go through schematic design, design development, construction drawings all the way through to complete schematics so that we can put the project out to bid in one way or the other. So there will be other consultants as well through that process. Thank you.

Any questions members of the board? Any questions members of the board? Going once, going twice, going three times. Thank you.

Thank you.

All right. Any questions before we adjourn? Any questions before we adjourn? Any questions before we adjourn?