Education

Cornell College gets millions in upgrades without spending more

Technology company gets paid for its work through energy savings

After completing work on Cornell College’s aged steam plant system, crews will continue making upgrades through the winter, with the majority wrapping in the spring. (Jim Slosiarek/The Gazette)
After completing work on Cornell College’s aged steam plant system, crews will continue making upgrades through the winter, with the majority wrapping in the spring. (Jim Slosiarek/The Gazette)
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MOUNT VERNON — As one of Iowa’s earliest institutions of higher learning, 166-year-old Cornell College — situated on a picturesque property along the northwest edge of Mount Vernon — holds the distinction of being among the few U.S. colleges with an entire campus on the National Register of Historic Places.

But with that distinction comes aging infrastructure demanding costly upkeep inside inefficient facilities, presenting challenges in Cornell’s pursuit to be fiscally prudent and environmentally friendly.

Until now.

About a year ago, Milwaukee-based Johnson Controls reached out to Cornell with a pitch to recast the school’s infrastructure in a more “green” light by making $5.9 million worth of improvements aimed at cutting energy usage by 20 percent.

The proposal was unusual in that the diversified technology company wouldn’t get paid unless the savings materialized, according to Kay Langseth, Cornell’s vice president for business affairs and treasurer.

After months of discussion and collaboration, Cornell signed on.

“We won’t make any payments until next August when the project is complete and they start to make their measurements,” Langseth said of the deal, which contrasts traditional debt financing and in doing so doesn’t affect Cornell’s existing debt obligations.

Here’s how it works:

Over the next several months, Johnson Controls will upgrade targeted areas of infrastructure needing repair — installing high-efficiency boilers and new windows, for example.

About a year from now, measurements resulting from the efficiencies will be taken and continue annually for the term of the 18-year deal, with savings going back to Johnson Controls for the duration of the agreement — which guarantees the efficiencies will pay off the full $5.9 million cost.

Should shortfalls emerge, Johnson Controls must address the problems in order to get paid.

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“The reason we do the annual look-back is because if the savings aren’t there, then we don’t have to pay until we get it fixed,” Langseth said. “That’s guaranteed.”

Aaron Rittenhouse, Midwest program leader with Johnson Controls, said contingent payment programs like this one are “unique in the marketplace because Johnson Controls doesn’t get paid unless we produce the mutually agreed-upon result.”

“If there’s a shortfall, we have an obligation to fix the root causes,” Rittenhouse said. “If we over-perform, Cornell keeps the additional savings. The risk is fully transferred to Johnson Controls.”

Though Cornell won’t realize the full savings until 2037, Langseth said, the college will benefit in the short term from a lesser need for upgrades and equipment improvements — not to mention other indirect implications of having inefficient infrastructure.

“It’s more than just the energy savings,” she said, citing Cornell’s “old and aging steam plant” that needs regular maintenance.

“Those dollars were not insignificant to us,” Langseth said. “So it’s not just the utility savings.”

And once the contract term expires, the college will reap the full benefits, Cornell President Jonathan Brand said.

“It’s much like buying a really great car, where you might be done after those 18 but you’re going to go for another 50 years of savings after those 18 years,” he said. “This car is going to keep on running.”

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Cornell isn’t the first college or university to collaborate with Johnson Controls, although it is alone in Iowa. Other schools that have embarked on multimillion-dollar improvement plans with the company include Samford University in Homewood, Ala., and Tulane University in New Orleans.

Johnson Controls, a global diversified technology company with customers in more than 150 countries, approached the private liberal arts college in Mount Vernon based on its solid endowment foundation, steady enrollment and good credit, according to Brand.

And, even as private and public schools locally and nationally struggle to recruit from a shrinking and shifting pool of high school graduates, Cornell has carved out a niche for itself with its “one course at a time” education model. In 1978, 125 years after its 1853 founding, Cornell adopted a signature block plan that allows students to devote themselves to just one subject for three-and-a-half week terms.

Although numbers still are being finalized, Brand said, Cornell’s head count this fall should hold steady between 1,000 and 1,050 students. Its endowment sits at $77 million, and this new partnership will enable it to more rapidly advance “what were formerly midterm goals.”

“We will be able to get entirely off the steam plant, something that we have been hoping to do for years, as well as undertake several environmentally important projects without overburdening our budget,” he said.

Some records indicate Cornell’s steam plant dates to the late 1800s, according to Brand, and Johnson Controls’ plan includes installing the high-efficiency boilers to get the campus’ final eight buildings off the aged plant before winter.

It’s also installing new windows on two buildings and upgrading many of the 46 main campus buildings with LED lighting. The new windows require approval from historic preservation officials, but most of the improvements won’t because they don’t affect the buildings’ exteriors.

Still, Langseth said, “Every building on campus will be touched.”

Engineers have been on campus since May.

“What they’ve done is they’ve engineered the savings,” she said. “Working with me and my facilities staff, we decided which items made the most sense, and we did that primarily based on savings.”

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After completing the steam plant work, crews will continue making upgrades through the winter, with the majority wrapping in the spring.

“This work will not only create a better environment for our students, faculty and staff, but it will help us save money and eliminate wasteful expenses without taking out loans or issuing bonds for these projects,” Langseth said.

Many students, faculty and staff know these upgrades are needed and important to the school’s sustainability and mission, according to Brand.

“This project will liberate additional funds that can be used elsewhere,” Brand said, adding, “We are now able to make some important environmentally appropriate steps.”

Comments: (319) 339-3158; vanessa.miller@thegazette.com

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