HB-5238, As Passed Senate, April 24, 2018

SUBSTITUTE FOR

HOUSE BILL NO. 5238

     A bill to amend 1976 PA 451, entitled

"The revised school code,"

by amending section 1274a (MCL 380.1274a), as amended by 2017 PA

23.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

     Sec. 1274a. (1) The board of a school district or intermediate

school district may contract with a qualified provider for the

acquisition or financing of energy conservation and improvements or

operational improvements to school facilities or infrastructure.

These improvements or the financing or refunding of the

improvements may be paid from operating funds of the school

district, from the proceeds of bonds or notes issued for energy

conservation and improvements or operational improvements to school

facilities, or from an installment contract or lease-purchase

agreement, or the board or intermediate school board may enter into

1 or more energy saving performance contracts. These contracts may

contain a written financial guarantee providing that the costs of

improvements will be paid only if the energy savings or operational

savings are sufficient to cover them. Energy conservation and

operational improvements to school facilities may include, but are

not limited to, adding square footage to existing school

facilities; building envelope improvements; heating, ventilating,

and cooling upgrades; lighting retrofits; installing or upgrading

an energy management system; motor, pump, or fan replacements;

domestic water use reductions; information technology improvements

associated with an energy conservation and operational improvement

to school facilities; municipal utility improvements associated

with an energy conservation and operational improvement to school

facilities; and upgrading other energy consuming equipment or

appliances. Operational improvements include, but are not limited

to, adding square footage to existing school facilities, or

installing equipment or providing services that result in

decreased, eliminated, or avoided operating or maintenance costs.

Operational improvements do not have to be energy conservation

related.

     (2) A school board or intermediate school board that contracts

for energy conservation and improvements or operational

improvements to school facilities under subsection (1) may require

the qualified provider to furnish a bond that guarantees energy

cost savings or operational savings for a specified period of time.

     (3) If a school board or intermediate school board enters into

an energy saving performance contract under this section, all of

the following apply:

     (a) The bids for the contract shall provide a detailed

breakdown of the energy performance savings or operational savings

to be derived each year and for the duration of the energy saving

performance contract, including at least all of the following:

     (i) A description of the guaranteed energy use savings or

operational savings, and tasks to be performed under the energy

saving performance contract.

     (ii) The combined total net cost of all of the energy

conservation measures or operational improvements in the project.

     (iii) The projected energy savings and operating and

maintenance cost savings resulting from the project.

     (iv) The useful life of each energy conservation measure or

operational improvement.

     (v) The simple payback period.

     (b) The qualified provider shall certify that measurement and

verification techniques for determining cost savings will be

performed in accordance with the protocols promulgated by the

International Performance Measurement and Verification Protocol,

Inc., now known as Efficiency Value Valuation Organization.

     (4) The board of a school district or intermediate school

district may provide for the removal or treatment of asbestos or

other material injurious to health for school facilities and may

pay for the improvements from operating funds of the school

district or from the proceeds of bonds or notes issued for that

purpose.

     (5) Issuance of bonds for the purposes authorized by this

section shall be considered as issued for capital expenditures for

all purposes including section 16 of article IX of the state

constitution of 1963. A lease-purchase agreement issued pursuant to

this subsection is not subject to the revised municipal finance

act, 2001 PA 34, MCL 141.2101 to 141.2821, and is not a municipal

security or a debt as those terms are defined in that act.

     (6) Energy conservation and improvements or operational

improvements to school facilities, or substance removal or

treatment authorized by this section is subject to the competitive

bidding requirements of section 1267.

     (7) If energy conservation and improvements or operational

improvements to school facilities are made by a school district or

intermediate school district as provided in this section, the

school board or intermediate school board shall determine the

following information and shall report the following information to

the state treasurer within 60 days after the completion of the

improvements:

     (a) Name of each facility to which an improvement was made and

a description of the energy conservation and improvements or

operational improvements to school facilities.

     (b) Actual energy consumption during the 12-month period

before commencement of the energy conservation improvement.

     (c) Project costs and expenditures, including the total of all

lease payments over the duration of the lease-purchase agreement.

     (d) Estimated annual energy savings or operational savings,

including projected savings over the duration of the installment

contract.

     (8) If energy conservation and improvements or operational

improvements to school facilities are made as provided in this

section, the school board or intermediate school board shall report

to the state treasurer by July 1 of each of the 5 years after the

improvements are completed the actual annual energy consumption or

operational savings of each facility to which improvements were

made. The forms for the reports required by this section shall be

furnished by the state treasurer.

     (9) An installment contract described in this section may

include a lease-purchase agreement, which may be a multiyear

contractual obligation that provides for automatic renewal unless

positive action is taken by the board of the school district or

intermediate school district to terminate that contract. Payments

under a lease-purchase agreement are a current operating expense

subject to annual appropriations of funds by the board of the

school district or intermediate school district and shall obligate

the board of the school district or intermediate school district

only for those sums payable during the fiscal year of contract

execution or any renewal year thereafter. The board of the school

district or intermediate school district may make payments under a

lease-purchase agreement from any legally available funds or from a

combination of energy or operational savings, capital

contributions, future replacement costs avoided, or billable

revenue enhancements that result from energy conservation and

improvements or operational improvements to school facilities, if

the board of the school district or intermediate school district

has determined that those funds are sufficient to cover, in

aggregate over the full term of the contractual agreement, the cost

of the energy conservation and improvements or operational

improvements to school facilities. The lease-purchase agreement

terminates immediately and absolutely and without further

obligation on the part of the board of the school district or

intermediate school district at the close of the fiscal year in

which it was executed or renewed or at such time as appropriated

and otherwise unobligated funds are no longer available to satisfy

the obligations of the board of the school district or intermediate

school district under the lease-purchase agreement. During the term

of the lease-purchase agreement, the board of the school district

or intermediate school district is the vested owner of the energy

conservation and improvements or operational improvements and may

grant a security interest in the energy conservation and

improvements or operational improvements to the provider of the

lease-purchase agreement. The board of the school district or

intermediate school district shall not be obligated under a lease-

purchase agreement for more than 20 years after either the date of

the final completion of the energy conservation and improvements or

operational improvements to school facilities or the end of the

useful life of the aggregate energy conservation and improvements

or operational improvements to school facilities, whichever occurs

first. Upon the termination of the lease-purchase agreement and the

satisfaction of the obligations of the board of the school district

or intermediate school district, the provider of the lease-purchase

agreement shall release its security interest in the energy

conservation and improvements or operational improvements.

     (10) As used in this section:

     (a) "Energy saving performance contract" means an agreement

for the evaluation, recommendation, and implementation of energy

conservation measures or operational improvements including, but

not limited to, an energy audit or detailed energy study; the

design, installation, operation, and maintenance of 1 or more

energy conservation measures; energy management services; and an

energy savings guarantee.

     (b) "Qualified provider" means an individual or a business

entity that is experienced in performing design, analysis, and

installation of energy conservation and improvements or operational

improvements and facility energy management measures and that will

provide these services under the contract with a guarantee or on a

performance basis.