The Plumas County Board of Supervisors agreed Dec. 17 to transfer a total of $10.9 million from a loan fund into a capital improvement fund to finance the replacement of failing generators and heating, ventilating and air-conditioning units.
The public input and board discussion at the Dec. 17 supervisors’ meeting focused less on the amount of the transfer and more on a comprehensive energy infrastructure package and the process the supervisors followed before approving a 30-year contract with ENGIE Services U.S..
Critics challenged the legality of authorizing ENGIE as the contractor without soliciting and considering bids from other energy companies. They also raised questions about the lack of a public hearing before board approval of contract funding.
“I don’t think we went through the proper bid process, and I don’t think we went through the proper public notice process,” said Rick Foster, a Quincy resident who frequently attends the board of supervisors’ meetings.
ENGIE negotiations began in January 2023
County officials have been negotiating for two years with ENGIE, a French multinational electric utility company that calls itself a world leader in long-term, efficient carbon-reducing solutions. After company officials assessed 45 county facilities for energy inefficiencies, they proposed a multiphase, multiyear project, which they said could save Plumas County as much as $4.8 million over 30 years. The contract calls for ENGIE to replace energy-related equipment in most county-owned buildings.
The supervisors voted unanimously March 19, 2024 to approve the contract but waited until August to discuss funding. On Sept. 3 they committed $1 million in general funds for the project as part of the county’s 2024-2025 budget, and authorized an additional $9.8 million in equipment lease-purchase and lease-back agreements with several financial institutions.
As collateral for the loan, the county used its equity in three properties: the courthouse, courthouse annex and the animal shelter. The courthouse and annex have prior liens against them from financial transactions in 2002 and 2015. Supervisor Greg Hagwood said adding the animal shelter provided enough value to complete the necessary equity for the loan, which will be held by Webster Bank at 4.5% interest.
“I feel very strongly that we’ve been in compliance since the beginning.”
Josh Brechtel, Plumas County interim county counsel
Plumas County Supervisor Kevin Goss and Treasurer/Tax Collector Julie were among those who raised questions in September about the loan agreement. Goss asked for assurance that the board’s procedure followed all the proper steps and that it had held all of the public hearings required.
Interim County Counsel Josh Brechtel was unequivocal: “I feel very strongly that we’ve been in compliance since the beginning,” he said at the board’s Sept. 3 meeting.
Engel leads the critics
Supervisor Jeff Engel was not so sure then, and he has continued to challenge the financial agreement with ENGIE. While he voted for the contract in March, he has consistently voted against it ever since.
“We’re leasing property to lease it back so we can buy something else. Does that make sense to you?” Engel said at the board’s Dec. 17 meeting.
Plumas County District Attorney David Hollister raised questions about the difference in cost to replace two generators by a local contractor ($24,736) and what ENGIE proposed ($103,840). He also challenged the county’s single-contractor agreement with ENGIE and the public hearing process the supervisors used.
“Good ideas stand on their own. If ENGIE was the best package, it should have gone out to bid,” Hollister said.
“We didn’t follow that process.”
Mimi Hall, Plumas County supervisor elect
Supervisor-elect Mimi Hall has suggested previously that the county’s purchasing policy was violated by negotiating a major contract without seeking bids from other companies. In a Zoom comment Dec. 17, she added that state government code requires a public hearing noticed two weeks in advance and published in a local publication.
“We didn’t follow that process,” Hall commented Dec. 17 on Zoom.
A separate government code requires a public hearing, noticed two weeks in advance, for a public agency to enter into a financing contract. At the August 20 meeting, when the supervisors first discussed the ENGIE funding package, the item was posted on the agenda under planning, treasurer/tax collector. The goal was to approve a $10.8 million loan package. The supervisors continued that discussion to Sept. 3, when it appeared on the agenda under departmental matters, debt committee presentation. Neither agenda announced a public hearing. The $10.8 million loan was approved Sept. by a 4-1 vote, with Engel voting no.
Hall also questioned the savings asserted by ENGIE over the 30-year life of the contract. “$4.8 million in guaranteed savings compared with $5 million in financing costs over 30 years isn’t a savings to me. It’s not even a net zero,” Hall said.
ENGIE contract addresses years of “neglect”
The $10.9 million on the table Dec. 17 is to fund the immediate replacement of generators and HVAC systems. Several have failed; the county can’t wait for ENGIE’s comprehensive overhaul of the county’s energy system, said County Administrative Officer Debra Lucero. ENGIE will reimburse these costs, she said.
Lucero vigorously defended the process the county has used in its negotiations with ENGIE. She cited county policy for contracts that allow the use of a single source for large capital projects.
The county’s purchasing policy stipulates that all contracts greater than $25,000 require a competitive bid process involving a public notice soliciting bids posted at least 10 days before opening the bids. It includes exceptions for services that are “the only product or service that satisfies” the bid requirements, “usually because of a technological, specialized, or unique character, or proprietary nature.”
Lucero also cited the urgency of dealing with the county’s aging energy infrastructure. Some equipment is beyond repair. Malfunctioning HVAC systems have jeopardized the health of county workers, provoking a complaint filed with OSHA. Failing energy systems are taking a toll on workforce morale and increasing the costs of temporary repairs, she said. All the while the county’s Pacific Gas and Electric Co. costs have escalated in two years from $843,000 to $1.3 million, Lucero said.
The current transfer of funds to capital improvements is part of a much larger project. “We are really at the Nth hour here,” she said. If the ENGIE contract is jeopardized the county will lose a $90,000 incentive, Lucero said.
“What we’re trying to do is replace 40 years… of neglect of our equipment in two years to hopefully get us up to speed,” she said.
Supervisor Tom McGowan supported Lucero, citing the financing bind that had kept previous boards from dealing with the county’s energy infrastructure crisis. They have acknowledged the need but haven’t had the funding to replace aging equipment, he said.
“This whole thing can be picked apart until nothing gets done.”
Tom McGowan, Plumas County supervisor
“ENGIE has provided the financing that we could not afford because our credit score was so low… They guarantee the cost with the savings. It’s a no brainer,” McGowan said. “This whole thing can be picked apart until nothing gets done.”
Hagwood added: “This is a comprehensive, exhaustive approach to defer maintenance and infrastructure failures.”
After nearly an hour of discussion, Hagwood seconded Supervisor Dwight Ceresola’s motion to approve the $10.9 million transfer. It passed 4-1. Engel voted no.
