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Mr. Seidel explained that is the statutory maximum, in Minnesota, for this type of <br />contract for cities, is twenty years. Typically, the contract will be within the fifteen - <br />to -twenty-year range. Ideally, they want to be in a financial situation. Some <br />projects have expensive capital assets that are not going to pay for themselves with <br />efficiencies and they are really trying to find a way to pay for these so these items <br />could be bundled with some other efficiency items that could either pay for it or <br />could turn a 2.5-million-dollar problem by pairing other savings into a half million - <br />dollar problem, for example. <br />Member Mueller indicated she was curious about the five percent projected <br />increase in costs annually. She wondered if this is what the City has typically been <br />seeing or is this a higher projection based on some of the shifts and the environment <br />or a standard amount by ABM. <br />Mr. Seidel explained it is more on the standard side. hi terms of what ABM has <br />experienced in Minnesota over the last half decade to a decade, the five percent is <br />actually low. There is definitely an argument for increasing that by a couple of <br />points which would increase the four -million -dollar figure. He indicated this is on <br />the conservative side. <br />Member Mueller asked as a part of this process does ABM assess what is end of <br />life for existing equipment and timelines for that rather than to trash everything the <br />City has already invested in. <br />Mr. Seidel explained core to this process is what they call a capital volatility <br />assessment and essentially his company goes through all of the relevant existing <br />equipment and then analyze its life, analyze its current condition and efficiency <br />capabilities, and assign it a letter grade based on that and furthermore, take that and <br />assign it a volatility index of the likelihood of failure over an x number of years. <br />Member Mueller was curious about the annual savings for HVAC repairs, lighting <br />replacement, which was touched on in the presentation, she wondered how that <br />related to the fees the City would be paying to ABM because whether it is existing <br />equipment or equipment being implemented, the City is still paying to maintain it <br />all. She did not understand how that is calculating into the savings. <br />Mr. Seidel explained for lighting replacement, in most of the budgets within the <br />four facilities with one or two exceptions, there is not a capital budget for lighting, <br />it is just built into the maintenance and operations budget and if doing a large LED <br />retrofit in the building, not only are all the lights new but will also last longer. ABM <br />is able to project the typical savings on that over a number of years. For HVAC <br />repairs, by replacing older equipment that requires more time, more parts, more <br />breakage of parts with more time servicing it, both internally and externally, <br />replacing with newer equipment that either by design or just by being newer, <br />require less repairs, which is how ABM build out some items like that. Once they <br />Page 3 of 7 <br />