HB-4080, As Passed Senate, April 19, 2017

SUBSTITUTE FOR

HOUSE BILL NO. 4080

A bill to amend 1976 PA 451, entitled

"The revised school code,"

by amending section 1274a (MCL 380.1274a), as amended by 2003 PA

255.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

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

intermediate school district ~~, or local act school district~~ may

contract with a qualified provider for the acquisition or financing

of energy conservation and 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, or from the proceeds of bonds or notes

issued for energy conservation and 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

are sufficient to cover them. Energy conservation and operational

improvements to school facilities may include, but are not limited

to, 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.

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

for energy conservation and operational improvements to school

facilities under subsection (1) may require the qualified provider

to furnish a bond that guarantees energy cost 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 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 and

tasks to be performed under the energy saving performance contract.

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

conservation measures 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.

(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 ~~published in January~~

~~2001~~ promulgated by the ~~international performance measurement and~~

~~verification protocol inc.~~International Performance Measurement and

Verification Protocol, Inc., now known as Efficiency Value

Organization.

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

district ~~, or local act 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 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 operational improvements to

school facilities are made by a school district ~~, local act 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 operational

improvements to school facilities.

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

before ~~completion~~ commencement of the improvement.

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

(d) Estimated annual energy savings, including projected

savings over the duration of the installment contract.

(8) If energy conservation and 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 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

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 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 operational

improvements and may grant a security interest in the energy

conservation and 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 operational

improvements to school facilities or the end of the useful life of

the aggregate energy conservation and 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

operational improvements.

(10) ~~(9)~~ As used in this section:

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

for the evaluation, recommendation, and implementation of energy

conservation measures 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 operational improvements

and facility energy management measures and that will provide these

services under the contract with a guarantee or on a performance

basis.

Enacting section 1. This amendatory act takes effect April 1,

2017.