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Meeting Date:
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5/23/2017 - 5:30 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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4. Action on a Request to Adopt Resolutions for the Plan of Finance for the Issuance of Bonds to Fund Energy-Efficiency Projects (Phase II) and a Resolution to Exceed the Revenue Limit for Energy-Efficiency Projects (Phase II) in the 2017-18 through 2036-37 School Years
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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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1. Resolution I-Plan of Finance for Bond Issuance-Energy Efficiency Projects Phase II
2. Resolution II-Revenue Limit Exemption-Energy Efficiency Projects Phase II
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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 Wis. Statute §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 U.S., Inc., 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 March 2017, the Board authorized the Administration to work with the City and the Financing Team (Piper Jaffray, Katten Muchin Rosenman LLP, Hurtado Zimmerman SC, and Public Financial Management) to develop a financing plan to fund up to $40 million of energy-efficiency projects – Phase II.
Also submitted to the Board for approval at this meeting is a recommendation from Facilities and Maintenance Services to enter into a three-year performance contract under Wis. Statute §66.0133 with Johnson Controls, a two-and-a-half-year performance contract under Wis. Statute §66.0133 with Performance Services, Inc., and a three-year performance contract under Wis. Statute §66.0133 with Trane U.S., Inc., for $34.3 million of energy-efficiency Phase II projects at twenty-six school sites.
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Fiscal Impact Statement:
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This item authorizes expenditures. If approved, the Administration will work with the City, the Redevelopment Authority of the City of Milwaukee (RACM), and the Financing Team to issue RACM Lease Revenue Bonds in an amount sufficient to fund approximately $34.3 million of energy-efficiency projects. Issuance cost in an amount not to exceed $686,000 will also be funded from bond proceeds and charged to account FAR-0-0-ECE-DW-EACL, debt administrative costs. Estimated annual administrative cost of $2,100 over the term of the debt will be charged to account ODB-0-0-DBT-DW-EACL.
If approved, this item authorizes the Administration to exceed the revenue limit for energy-efficiency projects (Phase II) in the 2017-18 through 2036-37 school years under Wis. Statute §121.91(4)(o)(1m) for debt service amounts as estimated in the Resolution.
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Implementation and Assessment Plan
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Adoption of the Resolution for the issuance of redevelopment lease revenue bonds by RACM and matters related thereto for Milwaukee Public Schools will provide MPS with funding for $34.3 million of energy-efficiency projects (Phase II) under the a three-year performance contract under Wis. Statute §66.0133 with Johnson Controls, a two-and-a-half-year performance contract under Wis. Statute §66.0133 with Performance Services, Inc., and a three-year performance contract under Wis. Statute §66.0133 with Trane U.S., Inc.
Wis. Statute §121.91(4)(o)(1) allows a school board to adopt a resolution to exceed the revenue limit in any school year by the amount spent by the school district in that school year on a project to implement energy-efficiency measures or to purchase energy-efficiency products, including the payment of debt service on a bond issued to finance the project, if the projects results in the avoidance of, or reduction in, energy costs or operational costs, the project is governed by a performance contract entered into under Wis. Statute §66.0133, and the bond obtained to finance the project is issued for a term not exceeding 20 years. If so adopted, the resolution is valid for each year in which the school board pays debt service on the bonds.
Wis. Statute §121.91(4)(o)(3) requires that, when a school district issues bonds to finance such projects described above and utility costs are measurably reduced as a result of the project, the school board shall use the savings to retire the bonds.
As a matter of best practice, the Board should adopt the Resolution for Revenue-Limit Exemptions For Energy Efficiencies when entering into performance contracts, as referenced in Wis. Statute §66.0133 and when future utilization of the Revenue Limit Exemption for Energy Efficiencies under Wis. Statute §121.91(4)(o) is expected. Board-approved resolutions must be passed by October 1 of the school year in which a revenue-limit exemption is sought.
Adoption of the resolution to Exceed the Revenue Limit for Energy-Efficiency Projects (Phase II) provides funding for the corresponding estimated debt-service payments in compliance with Wis. Statute §121.91(4)(o)(1m). Upon final issuance of the bonds, and prior to October 1, 2017, the Administration will submit a request to amend this resolution for final actual debt-service amounts.
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Recommendation:
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The Administration recommends that the Board adopt the following resolutions: (1) resolution relative to the issuance of bonds by RACM to fund $34.3 million of energy-efficiency projects (Phase II) and related bond-issuance costs not to exceed 2% and (2) resolution to exceed the revenue limit for energy-efficiency projects (Phase II) in the 2017-18 through 2036-37 school years.
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Approvals:
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Recommended By:
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Signed By:
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LaWanda Baldwin - Comptroller
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Signed By:
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Shannon Gordon - Senior Director
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Signed By:
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Dr. Darienne Driver - Superintendent
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