Representatives of the Duluth school district and Johnson Controls of Duluth said Monday that the amount of money the company will be eligible to receive for its role in the proposed $257 million school plan was greatly overstated during a public panel discussion the day before. 

For assessing the district's needs and overseeing public discussions, Johnson Controls is guaranteed a lump sum of $250,000. The multinational company will receive 2 percent of the project's construction costs - about $4.5 million - for managing the remodeling and new construction of 15 school buildings, according to its contract with the district, Johnson Controls account executive Mike David said. 

Confusion over Johnson Control's contract with the district arose after a public meeting Sunday night at which a community panelist said the firm's compensation could be as much as $33.4 million. 

The firm entered into a contract with the district for designing and implementing a long-range facilities plan after a public bidding process held in January 2006. 

As program manager, the firm will oversee about $30 million to $35 million of the project's soft costs, such as fees for architects and engineers, but most of that money will be used to pay sub-consultants for their work. 

"Johnson Controls acts as the conduit," said Brent Jones, program manager for Johnson Controls. "We get the money upfront and use it to pay for the people we hire." 

The contract language does not prohibit Johnson Controls from using its own employees to do the consulting work, but David said Johnson Controls has every intention of hiring local consultants. 

The contract also reserves the district's right to reject any subcontractors chosen by Johnson Controls. The contracting work would be hired through a public bidding process. 

most effective way' 

Kerry Leider, property and risk manager for Duluth public schools, said it is not uncommon to hire a consultant to design and implement a school project. In fact, doing so ensures accountability for the district, he said. 

"Too often when you split up projects, the people who come in and do the initial estimates are way off and it ends up costing you more," he said. 

Some community members and School Board members at Sunday's meeting questioned whether it was a conflict of interest for the same company that determines how much the project will cost to get a percentage fee based on that estimate. 

Judy Marks, associate director of the National Clearinghouse for Educational Facilities in Washington, D.C., said it would not be in Johnson Controls' best interest to overprice the project. 

"A credible firm knows that to remain in business they have to deliver what they promise," Marks said. "Johnson Controls is a major player in this industry; I don't think it would make much sense for them to come in and try and pull a fast one on the Duluth schools." 

Jeff Schiltz, account executive for Johnson Controls, said the firm relied on several local contractors to estimate the cost of the project. 

"If we came up with a half-a-billion plan, the community wouldn't support it because of the tax impact," Schiltz said. 

SCHOOL Board response 

Some School Board members at Sunday's meeting said they were unaware Johnson Controls had been hired for both the design and implementation of the project. Others members said the long-term commitment with the firm was clear from the beginning. 

Superintendent Keith Dixon said all board members were mailed a copy of the contract after official language was drafted in January. 

"We authorized up to $250,000 to go to Johnson Controls to come up with a plan, in my mind," board member Laura Condon said. Condon said she never saw a copy of a contract that agreed to hire Johnson Controls for the implementation of the project. 

"I am not trying to imply anything here. I just want more answers about the language in that contract," Condon said. 

Board member Mary Cameron said she also did not see a contract but was aware of the long-term commitment to Johnson Controls. 

"We knew they were going to be with us until the end," Cameron said. "I didn't know about the percentages, though, and if the questions I have aren't answered and I feel things have been hidden from me, I would support tabling the vote." 

Ann Wasson, the board chairwoman who also signed off on the contract, said none of the details were hidden from board members. 

"This should come as no surprise to board members," she said. "I understood [Johnson Controls] would be getting 2 percent, which is standard ... no flashing red lights." 

Board members Tom Hustad and Nancy Nilsen said they were aware of the contract and felt confident the percentages allocated to Johnson Controls were standard for the industry. 

Dixon said board confusion might be stemming from an overload of information. 

"It has been a long process, and there has been a ton of information," Dixon said. "It's hard to remember everything that has come forward on the spot." 

Johnson Controls officials said the compensation represents a fair price for more than six years of work, and that critics are trying to delay action on the controversial plan. 

"There's nothing hidden here; the district asked for someone to take over this process from beginning to end," Schiltz said. 

SARAH HORNER covers K-12 education. She can be reached weekdays at (218) 723-5342 or by e-mail at shorner@duluth news.com. 

News Tribune staff writer Chris Hamilton contributed to this report.