Shelton Public Schools
Energy Savings Company (ESCO)
HVAC Project
Shelton Public Schools is preparing a Phase 1 HVAC system upgrade to replace aging, inefficient classroom equipment while carefully managing the financial impact on local taxpayers.
Why This Project is Needed
Our five multi-zone HVAC units heat and cool the majority of our classrooms. Installed in 2000, these units are over 26 years old and have surpassed their functional lifespan. Repair costs over the past four years have exceeded $150,000, and replacing single components now costs nearly $30,000 each. Continuing to patch old systems is no longer cost-effective.
Project Scope
Partnering with Facilities Advocates, an Energy Savings Company (ESCO), Phase 1 will include:
Replacing old equipment with new, high-efficiency units designed to fit into existing ductwork and housing locations.
Deep cleaning and prepping all ductwork prior to installation.
Full testing and commissioning of existing system controllers to ensure peak efficiency.
Cost and Financing
The project features a Guaranteed Maximum Price (GMP) capped at $1,625,000, which includes a $50,000 contingency allowance for control updates if needed. To cover this cost, the Board of Education is evaluating two primary options (or a hybrid of both):
7-Year Lease Purchase (Lower Interest): Fits within our existing tax and spending authority. Shorter payoff timeline saves taxpayers significant interest over time. Here are some estimated costs from Northland Securities prior to the current GMP with this option:
Principal - $1,475,00
Interest - $260,000
Total Principal + Interest - $1,735,950
10-Year QCPUF Bond (Capital Fund): Uses existing Qualified Capital Purpose Undertaking Fund authority. A previous bond utilizes 1.8 cents of our 3-cent limit per $100 valuation, leaving ~1.2 to 1.3 cents available for this project through 2030. In 2030, the QCPUF would remain at 3 cents in order to fully fund the project if this financing option is utilized.
Due to this fund not being able to fully finance the project, this would have to be a hybrid option of QCPUF and Lease Purchase. Here are some estimated costs from Northland Securities prior to the current GMP with this option:
QCPUF - $945,000
Principal - $945,000
Interest - $250,600
Total Principal + Interest - $1,195,600
Lease Purchase for additional $620,000
Principal - 620,000
Interest - 109,437
Total Principal + Interest - $729,437
Total of Hybrid QCPUF + Lease
Principal - $1,565,000
Interest - $360,037
Total Principal + Interest - $1,925,037
The Lease Purchase financing option will ultimately save the taxpayer $189,000. You will see the total Principal amounts differing slightly on the initial numbers to do the cost of obtaining/issuing bonds and fees. The scope of the project is the same under both options. We will have more concrete numbers soon.
Tax Levy Context
To prepare for this project, the district strategically lowered the General Fund levy by 3 cents and adjusted the Special Building Fund. Currently the Special Building Fund has approximately $190,000 ($100,000 in CD) in it. In addition to the Special Building Fund, the district maintains a Depreciation Account for HVAC repairs and replacement. This account currently sits at $164,000 and some of these funds will also help offset the total cost of the project and reduce interest over time. The 2025-2026 Special Building Fund levy was $0.016975. The proposed levy for 2026-2027 would be $0.088609 producing $450,000 to front load the project. The increase in the Special Building Fund will produce around $450,000 in which will help front load the project reducing interest over time. Even with the proposed 2026–2027 budget adjustment, the overall tax levy remains lower than it was during the 2024–2025 school year.
School Year | Total Tax Levy (per $100 valuation) |
2023–2024 | $1.0500 |
2024–2025 | $1.1086 |
2025–2026 | $1.0073 |
2026–2027 (Proposed) | $1.0484 |
The Board of Education remains committed to fiscal transparency while providing safe, comfortable learning environments for our students.
For more information, please contact Rodney Engel, Superintendent, at rengel@sheltonbulldogs.org or 308-647-6742.