STAFF REPORT: TOWN HALL CONDENSING UNIT REPLACEMENT

TOWN OF VIEW ROYAL COUNCIL REPORT

TOWN HALL CONDENSING UNIT REPLACEMENT

RECOMMENDATION:

THAT the replacement of five (5) Condensing units be pre-approved for up to $110,000 + GST and be awarded to Island Temperature Controls in accordance to Purchasing Policy 1600-021, to be funded by Casino Revenue;

AND THAT the 2023-2027 Financial Plan be amended to accommodate this project.

PURPOSE:

The purpose of this report is to provide background on the status of the Town Hall building’s cooling system, the two condensing units that have subsequently failed, and to provide options regarding their replacement for Council consideration.

TIME CRITICAL:

It would be beneficial to have these condensing units replaced soon so that the remaining units are not overworked during the summer season, which would risk failure of additional units.

EXECUTIVE SUMMARY:

With the failure of a second condensing unit within the Building this year, the Town may be required to accelerate the replacement program for these units to manage cooling expectations for the summer months. The replacement of these units was initially proposed to be presented as part of 2024 budget deliberations, supported by the Energy Study that was completed for the Building in March 2023.

Staff recommend replacing all five units this year and at its earliest convenience to accommodate the summer season. The approximate cost for the replacement is $110K plus GST. The proposed funding would be via Casino Revenue, with a potential funding buffer through the CleanBC Commercial Express incentive program: the Building would see a GHG emission reduction by 53% and natural gas reduction of 59% as a result.

BACKGROUND:

The Town Hall building (the “Building”) currently has five (5) condensing units that provide cooling within the space. These units are original to the Building (over 25 years old) and have thus exceeded their recommended service life. This was confirmed by the Town Hall Energy Study, completed on March 22, 2023 by SES Consulting (the “Report”).

One of the condensing units failed last year. However, the Town elected to wait until the audit report was completed before replacing the unit. Doing so would allow the Town to capitalize on any options provided in the report that could improve the building’s energy efficiency and carbon footprint. Furthermore, staff believed that the temperature could still be regulated given that the remaining four units were still operational.

However, a second unit has since failed in the Building this year. As a result, it is believed that the subsequent units may see failures in the near future, especially with additional pressures being placed on these three units to maintain temperatures in the building this summer.

The failed units are unable to be repaired as a short-term solution: the R-22 refrigerant that it uses was phased out in 2020 due to its high ozone depletion potential.

DISCUSSION:

The plan for the Building was to install five new air source heat pump units (ASHP’s) to replace the aging condensers, as part of the 2024 budget. This was recommended in the Town Hall Energy Report, as these units have a higher efficiency and can also be used to provide heating in the winter. This added “heating” benefit would reduce the usage of the existing natural gas-powered furnaces in the Building during the cooler seasons.

As two of the five units have failed, staff are in the midst of obtaining quotes to replace these units. At the time of writing this report the following options and approximate cost estimates were presented:

1. Replace all units (5 units) this year: $110K plus GST
2. Replace the two failed units this year: $55K plus GST

The current estimates were provided by Island Temperature Controls, who are the maintenance providers for the Town’s current system and are well apprised with the building’s needs. Replacing all units at the same time does present cost savings to the Town (approximately $4K per unit for a total of $20K for all 5 units).

SUSTAINABILITY/CLIMATE CHANGE IMPACTS:

Replacement of these units provide the following benefits to the Town:

1. Energy Costs: at full replacement, the Report indicates a 130 Gigajoule reduction in natural gas use. While the addition of electrical power usage for the ASHP’s results in only a nominal reduction in energy costs per year, the Report indicates that natural gas is becoming increasingly expensive due to rising carbon taxes and unstable market conditions. Therefore, the Town would be sheltered by these future costs by switching to electrical based power consumption. The 130 GJ reduction amounts to a 59% reduction in natural gas usage.
2. Greenhouse Gas Emissions: by utilizing cleaner energy (hydro) and reduced energy use, the Report indicates a reduction in overall CO2 emissions of approximately 6.4 tonnes per year (or 1.3 tonnes per unit). This amounts to a 53% reduction in the building’s GHG emissions once all units are replaced.
3. R-22 Refrigerant: the new units would eliminate the usage of this refrigerant.

The proposed works are consistent with Town policies and initiatives to reduce energy consumption and greenhouse gas emissions, including:

• 2019-2022 Strategic Plan: continue to advocate for decreasing per capita GHG emissions for buildings
• 2012 Community Energy and Greenhouse Gas Emissions Plan: continue to set an example in advancing the target of reducing GHG’s of existing commercial buildings (7% of total reductions), as well as striving to achieve these targets by retrofitting electrical, mechanical, plumbing, old A/C and chiller units and water heaters with more efficient equipment
• 2022 Community Climate Action Strategy: continue to improve energy efficiency, encourage and enable fuel switching (i.e. decarbonize existing buildings).

FINANCIAL IMPLICATIONS:

There are currently two options that can be considered to replace the HVAC units:

Option 1 (recommended): replace all units (5 units) this year, at a cost of approximately $110K plus GST. If this option is approved, then staff recommend Council to pre-approve the direct award of the works to Island Temperature Controls (ITC) of up to $110K plus GST. This is in accordance with Purchasing Policy 1600-021, clause 10.8.14: ITC conducts the regular maintenance work on the Town’s HVAC systems and, given the need to install these units under short notice, there is a strong case for the cost effectiveness of maintaining the existing Contractor for this specific task.

Option 2: replace two of the five units this year, at a cost of approximately $55K plus GST, and budget the remaining three units for replacement next year. While the costs would be less for this year, the ultimate replacement costs would be more costly ($4K additional per unit). Staff can award the works as it is in accordance with the purchasing policy.

It is proposed to utilize Casino reserve funds to cover the cost of the replacement. Furthermore, incentives to help cover the implementation costs for these works may be available through the CleanBC Commercial Express Program. Staff recommend applying for this program to reduce the amount drawn from the Casino reserve.

Usage of Casino reserve funds does not affect taxation.

ALTERNATIVES:

Another option is to do nothing this year and to budget for the replacement of these units as part of next year’s budget. However, doing so could place significant stress on the three working units and could cause additional failures. This could result in warmer temperatures at the hall, creating an uncomfortable environment for the public, Council, and staff. Time would be of the essence given the upcoming summer season.

CONCLUSION:

With the upcoming summer season ahead, staff recommend Option 1: that all five units be replaced in the amount of $110K plus GST. Doing so would provide redundancy into the system at a reduced per unit cost.

Alternatively, Council could elect to exercise Option 2: that only the two failed units be replaced this year and the remaining three units be replaced as part of next year’s budget. Doing so would allow the building to maintain temperatures throughout the summer season, although with less redundancy and more risk of future failures. This option is cheaper in terms of budgeting for this year, but it is ultimately more expensive on a per unit overall cost basis.

The project is proposed to be funded via Casino Revenue and available funding through the CleanBC Commercial Express Program.

CONCURRENCE:

REVIEWED BY:

ATTACHMENTS:

1. Factsheet: Town Hall Energy Study