The Blaine County School District has entered into a settlement agreement with an energy service company over disputes about work performed in the district.

The district and Seattle-based McKinstry entered into a contract in 2010 to perform upgrades across the district. Following a series of disagreements, McKinstry filed suit in May 2012.

Here are the highlights of Tuesday’s agreement, according to a joint news release issued Tuesday afternoon:

• Blaine officials will pay McKinstry more than $665,000 for energy retrofit work completed at eight district buildings.
• McKinstry will pay the district $800,000 toward attorneys’ fees so the district will not have to dip into its levy funds to cover legal costs.
• All outstanding claims and counterclaims will be dropped and Blaine officials expect to save $9.5 million in energy costs through a 25-year agreement with McKinstry.

The settlement agreement comes less than three weeks after former Superintendent Lonnie Barber and the Blaine district parted ways. Under a separate settlement agreement, the district is paying Barber $600,000 to honor his contract.

With the McKinstry deal, the district will still benefit from the completed energy work and incentives, said School Board Chairman Paul Bates. Blaine County School Board trustees voted unanimously to accept the settlement agreement during a special meeting Tuesday.

“We have world-class systems in place that are valued at $20 million,” Bates said. “When considering the Department of Energy grant and Idaho Power incentive payments, and the payback from the guaranteed energy savings, conservatively we acquired $20 million worth of systems for an estimated $5 million.

“We know that we have excellent systems in place that will provide superior learning environments for our students and staff for the next 25 plus years.”

McKinstry Vice President Ash Awad said his company’s work will improve building air quality, replace outdated systems and improve energy efficiency.

“We believe the agreement reached is a fair and equitable way to resolve our differences and move forward,” Awad said. “One thing the parties have never disagreed about is the rationale for McKinstry’s work. Both the district and McKinstry focused first and foremost on improving the learning environment for the students of Blaine County.”

Joint news release

Here is the text of Tuesday’s Blaine County School District-McKinstry news release:

Blaine County School District and McKinstry jointly announce the amicable settlement of their dispute over energy-retrofit work performed on eight district buildings. The conflict led to litigation in May 2012,with McKinstry as the plaintiff.

As part of the agreement, all claims and counterclaims in the lawsuit will be dismissed. Terms of the settlement included an exchange of final payments. The district agreed to pay McKinstry $665,612 for work completed. To relieve the district of the need to apply levy funds to legal costs, McKinstry will pay the district $800,000 for use toward attorney fees. In addition, the district and McKinstry have entered into a 25-year agreement to ensure $9.5 million in energy savings.

Board Chairman Paul Bates said, “We have world-class systems in place that are valued at $20 million. When considering the Department of Energy grant and Idaho Power incentive payments, and the payback from the guaranteed energy savings, conservatively we acquired $20 million worth of systems for an estimated $5 million. We know that we have excellent systems in place that will provide superior learning environments for our students and staff for the next 25 plus years.”

McKinstry assisted the district in obtaining the $5 million grant from the Department of Energy to offset a portion of the project. Utility rebates totaling hundreds of thousands of dollars were also obtained for the benefit of the district as a result of the work.

“We believe the agreement reached is a fair and equitable way to resolve our differences and move forward,” said McKinstry Vice President Ash Awad, who participated in settlement discussions. “One thing the parties have never disagreed about is the rationale for McKinstry’s work. Both the district and McKinstry focused first and foremost on improving the learning environment for the students of Blaine County.”

Awad continued: “The work performed by McKinstry has resulted in improvements to air quality, keeping students, teachers, staff, and parents healthier. Systems that were aging have been replaced with systems that are environmentally sustainable and reduce energy consumption. These projects have also improved students’ ability to learn, with better lighting and reduced noise.”

Business Manager Mike Chatterton, who led the Blaine County School District efforts toward a final settlement said, “Further savings of over $2 million were realized during negotiations with the completion of interactive education tools at each school, and other costs including reduced maintenance and operation costs, which more than cover the remaining portion of legal fees.”

As part of the Blaine County negotiation team, Trustee Kathy Baker met with McKinstry attorneys, staff and CEO Dean Allen to finalize the settlement details. After the meeting she said, “On behalf of the board of trustees, I want to thank Dean Allen for working with us through this process. He is a man of integrity, and I have a great deal of respect for him.”

Business Manager Mike Chatterton said, “Both the district and McKinstry honored the spirit of the contract we originally agreed to in 2010. We always said we were committed to employing and doing business with as many local companies and trades people as possible. Over $15 million of the work was completed by local companies and businesses.”