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Meeting Date:
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3/21/2017 - 6:30 PM
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Category:
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ITEMS OF BUSINESS
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Type:
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Action
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Subject:
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11. Action on a Request to Approve the Financing Team (Underwriter, Bond Counsel, and Financial Advisor) and to Work with the City and Financing Team for the Purpose of Developing a Plan of Finance to Borrow for the Costs of Energy-efficiency Projects - Phase II
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Strategic Plan Compatibility Statement:
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Goal 3 Effective and Efficient Operations
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Attachments
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File Attachment:
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Background:
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In 2009, Wisconsin Act 28 originally created the Energy Efficiency Exemption (EEE) for projects completed within the fiscal year. In 2011, this law was modified, to include the following specifications: 1) the project must result in the avoidance of, or reduction in, energy costs or operational costs, 2) the project must be governed by a performance contract entered into under §66.0133, and 3) the levy may be used to repay the bonds or notes issued to finance the project, if any are issued for periods not exceeding 20 years.
In March 2016, the Board approved Johnson Controls, Performance Services, and Trane as pre-qualified energy-service contractors for the design, engineering, project management, and implementation of the replacement of large capital costs items in accordance with Wis. Statute §66.0133; Energy Savings Performance contracting, as referenced in the Revenue Limit Exemption for Energy Efficiency, Wis. Statute §121.91(4)(o).
In June 2016, the Board approved a contract with CESA #10 to provide owner’s representative services for performance-contracting energy savings and infrastructure-improvements projects.
In July 2016, the Board authorized the Administration to work with the City and Financing Team (Piper Jaffray, Katten Muchin Rosenman LLP, Hurtado Zimmerman SC, and Public Financial Management) to issue adequate bonds to fund anticipated energy-efficiency projects up to $27 million at Vincent High School, Wisconsin Conservatory of Lifelong Learning, and River Trail.
In September 2016, the Board approved entering into a three-year performance contract under §66.0133 with Johnson Controls and a two-year performance contract under §66.0133 with Performance Services, Inc., for $27 million of energy-efficiency Phase I projects at Vincent High School, Wisconsin Conservatory of Lifelong Learning, and River Trail.
In October 2016, the Board approved entering into an Amended and Restated Intergovernmental Cooperation Agreement between MPS, the City and the Redevelopment Authority of the City of Milwaukee (RACM), enabling the issuance of $27 million of RACM Lease Revenue Bonds and related issuance cost funded from the bond proceeds.
In December 2016, $27.3 million in RACM Lease Revenue Bond proceeds was received to fund the $26.9 million of Phase I energy-efficiency projects and $0.4 million of related cost of issuance, with the execution of the Amended and Restated Cooperation Agreement, an Amended and Restated Ground Lease, an Amended and Restated Lease, Bond Purchase Agreement, bond-offering documentation, and all necessary certificates and resolutions. The bonds issued include $6.3 million issued as Qualified Energy Conservation Bonds (QECB) through an allocation provided by the City for MPS’s use. The Bonds have a total term of 20 years, with all bonds being repaid by November 15, 2036.
In January 2017, the Board approved a resolution to exceed the revenue limit for energy-efficiency Phase I projects in the 2017-18 through 2036-37 school years, up to the annual debt service less the amount of energy (utility) cost savings, as a result of the projects, that will be applied to retire the debt.
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Fiscal Impact Statement:
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This item does not authorize expenditures.
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Implementation and Assessment Plan
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A plan of action is currently in process related to energy-efficiency projects' Phase II product-scope finalization and performance-contractor selection. A future recommendation to the Board will be forthcoming from Facilities and Maintenance Services at the conclusion of the process.
The Administration anticipates that up to $40 million will be needed to facilitate energy-efficiency projects – Phase II.
It is the intent of the Administration to work with the City and existing Financing Team (Piper Jaffray, Katten Muchin Rosenman LLP, Hurtado Zimmerman SC, and Public Financial Management) to develop a financing plan to seek the lowest-cost borrowing to facilitate possible funding of the energy-efficiency projects – Phase II.
The Administration would subsequently use the existing Financing Team (Piper Jaffray, Katten Muchin Rosenman LLP, Hurtado Zimmerman SC, and Public Financial Management) to facilitate any future Board-approved bond issuance to fund the energy-efficiency projects – Phase II.
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Recommendation:
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The Administration recommends authorization by the Board to utilize the Financing Team (Piper Jaffray, Katten Muchin Rosenman LLP, Hurtado Zimmerman SC, and Public Financial Management), and to work with the City and Financing Team to develop a financing plan, and to present a bond financing issue for the Board’s approval, to fund up to $40 million of energy-efficiency projects – Phase II.
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Approvals:
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Recommended By:
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Signed By:
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Gerald Pace - CFO
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Signed By:
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Dr. Darienne Driver - Superintendent
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