Way past 2%

The Trib has finally publishing an in depth story about JCI’s compensation for the Red Plan. This is Part 1 which extensively quotes all of JCI’s backers. When the Trib last left this story a year ago it left readers with the impression that Gary Glass didn’t know what he was talking about claiming that JCI could earn as much as $33 million dollars on the Red Plan. Why no, according to the story, JCI would only earn 2% or about $4.5 million.

We learn that JCI will earn 7% of $2.9 million cost of its initial Stowe and Lakewood projects being constructed this year. That’s $203,000. That would be over twenty million for the entire Red Plan, however, as the story points out JCI is also winning bids on the equipment that is being installed. No prices for that were mentioned in the story nor were the additional costs of having JCI service its equipment – a gift that keeps on giving.

About 15 percent of the total $2.9 million construction budget at Lakewood, or about $203,000, will initially go to Johnson Controls to cover professional service fees.

Representatives from school districts including Deer River, Brainerd and Grand Rapids, and Kyte, the executive director for the Minnesota Association of School Administrators, said standard professional service fees generally fall between 10 percent and 20 percent of the total construction cost.

For this particular project, Johnson Controls hired local architects and engineers but is using its own employees to cover commissioning and construction management services. For that work, including its program management fee, Johnson Controls will receive a little less than half of the $442,000, or about 7 percent of the total $2.9 million construction cost. That money will remain with Johnson Controls; the rest will flow through the company to pay design professionals.

Johnson Controls also stands to make a profit by bidding on air controls system under the company’s systems division. It already has been awarded contracts for that work at Lakewood and Stowe elementary schools.

Part 2 hasn’t come out so it would be premature of me to opine about the whole we have yet to read. A number of the Red Plan’s critics spent time talking with Sarah Horner about our concerns, We’ll soon see how the critics are treated. You can read many of them on this blog or on the Let Duluth Vote website. Check out the link to “know the facts.”

I draw this conclusion from today’s installment. JCI will earn at a minimum four times more than the Trib reported a year ago and that doesn’t count equipment sales. (nor does it count the arm twisting that led to the possible divulgence of a JCI competitor’s bids)

It will be interesting to see if the story, which portrays JCI as a corporate good guy, (They sold a thermostat to our old Adams School a century ago) goes any deeper.

Whether it does or not its not likely to delve into a most curious question. How could the folks who stand to make 7% or 15% plus equipment sales have been the ones to set the minimum price for any plan at a quarter of a billion dollars?

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