Presented by:Bob Barton,Bob Barton, CEOCatalyst Financial Group, Inc.working in support of EPA

National Tools for Schools Symposium 2001

Financing Financing Considerations Considerations

IAQ Tools for Schools

• What’s happening in your school?

• IAQ and Energy Efficiency

• Sources of Funding

• Costs of Delay

IAQ Financing - Summary

The Problems

• ________________________________• ________________________________• ________________________________• ________________________________• ________________________________• ________________________________• ________________________________• ________________________________• ________________________________

“Soft” vs “Hard” Solutions

Soft – Behavioral Modifications• Animal Allergens• Cockroach Allergens• Mold and Moisture• Secondhand Smoke• Dust Mites• Asthma Management Plan• School-Based Asthma Education

Programs• Chemical pollutants and cleaning

agents

Hard – New Equipment• Air Circulation

• HVAC

• Mites• Carpets

• Mold Moisture• Roofing

“Soft” vs “Hard” Solutions

IAQ and Energy Efficiency

Most of these problems will be improved or

eliminated with effective HVAC system.

How can you use energy dollars saved to pay for

the improvements?

Energy Efficiency Projects

• Unlike other capital projects• Dollars you need are buried in your

Utility Bill (operating exp)

• Delaying the installation is an expen$ive decision.

• You have the authority and resources

Capital vs. Operating Budget

Capital Budget (Debt)

• What is the approval process? • Board/Council• Referendum

• Ceiling on capital expenses?

• Restructure capital expense budget?

Operating Budget (Expense)

• Already in utility payments

• Easier approval process

• Energy efficiency projects may provide access to captive funds for other needs

Categorizing Financial Instruments

• Capital Expense•Bonds•Loans• “Performance

Contract”

• Operating Expense• Lease/Lease-

Purchase• “Performance

Contract”

• No Expense• Grants• Rebates/Incentives

What Services Can An ESCo Provide?

• • • • • • • • • • •

Common Performance Contracts

• Shared Savings Agreement• Fixed payment

•One-time verification•Taxable or tax-exempt

• Variable payment•Requires measuring and

monitoring•More expensive

• Guaranteed Savings Agreement• ESCo or insurance company• Can separate financing from technical

performance• Most commonly used for Public

Sector

• Own-Operate• ESCo owns facility and sells back

“output”

Common Performance Contracts

Benefits of Tax Exempt Lease Purchase Agreements

• Title to the Equipment Rests with Lessee

• Access to Low Cost, Tax-Exempt Funds

• Payments Are Subject to Annual Appropriation of Funds by Lessee (Not a Capital Budget Item)

• Easy paperwork• Fast• You may already be leasing

something!

Additional Considerations

• Three Treatments• Legal

• Authority• Voter Approval Issues

• Financial Reporting• GAAP/GASB• “Materiality”

• Internal Accounting

• Construction Financing• Escrow Accounts

• Master Lease

Note: Leasing legislation and interpretations are constantly changing. Always check with

local counsel to insure compliance.

“Equal Opportunity Sources”

• Internal Sources• Operating or capital budgets• Available fund balances

• Third Party Lenders• Existing Lenders

•Lease-purchase master lease (line of credit)

• New Lenders• Upcoming bond issue• Lease-purchase agreement

Specialty Sources

• Federal Programs• Dept of Agriculture

• Community Facilities Loan Fund

• Dept of Education• QZAB• Urgent School Renovation

Grants

• State Programs• Utility Programs

Specialty Sources

US Dept of Agriculture• Community Facilities

Loan Fund•Rural population focus•Up to 40 years or useful

life•Must show economic

need•Formula based pricing

•Average income of population

• $1.2 billion for urgent school renovation• School Renovation $901 million• IDEA/technology Activities $274 million• Charter School Facility $25

million

• Grants and 0% Loans• Authorized under part B of the

Individuals with Disabilities Education Act (IDEA)

Urgent School Renovation Funds

• Awarded on competitive basis• Student-age population• Need for school repairs• Fiscal capacity to meet repair

needs

Urgent School Renovation Funds

• Act Now!• Federal Cut off date = 9/30/02• State cut off date = 9/30/03

Urgent School Renovation Funds

Percentage Poverty

Percentage Match from Local Funds

0-9.99% 70%10-19.99% 50%20-29.99% 30%30-39.99% 10%

40% or greater None

• States have option to impose matching requirements. Example:

• http://www.ed.gov/inits/construction/allocations.html

• For additional information, please contact Sylvia Wright at (202) 260-3778.

• Contact your state Dept. of Ed.

Urgent School Renovation Funds

Grants

Getting to Yes

• Match eligibility requirements• Talk their language• Demonstrate need and solutions with

social impact• Always submit preliminary proposal

Grants

Getting to Yes

• Match eligibility requirements• Talk their language• Demonstrate need and solutions with

social impact• Always submit preliminary proposal

Sample Grants

American Lung Association School Partnership Grants For Asthma

Education• David & Lucile Packard Foundation, CA

• $98,748 for San Mateo County Schools• $116,420 for Santa Clara County Schools

• Meadows Foundation, TX• $94,950 for TX Elementary Schools

• Kate B. Reynolds Charitable Trust, NC• $69,885 for Western, NC Schools

Sample Grants

Public School Building Renovation Grants

•McBean Charitable Trust, CA• $1,000,000 for Newport, RI

• Abell Foundation, MD• $150,000 for Baltimore

•Beazley Foundation, VA• $400,000 to Portsmouth, VA

• Medtronic Foundation, MN• $209,400 for Minneapolis, MN

Sample Grants

Public School Health Program Grants

•The Ahmanson Foundation, CA• $30,000 to LA Unified School District

•The California Endowment, CA• $80,000 to Pajoro Valley USD• $107,500 to East Side Union HS

In Summary…

• IAQ can be “piggy-backed” on Energy Efficiency projects

• Tax-exempt lease purchase agreements can provide cost effective financing alternatives

• Costs of delay can be very expensive

• Alternative Financing may be available

• EPA can help

What Services Can An ESCo Provide?

• Walk-through energy audit• Comprehensive energy audit• Design and specification of new

equipment• Vendor of energy efficiency equipment• Installation/construction management• Ongoing maintenance• Training of personnel• Performance guarantees• Measurement and verification of project

performance• Financing• IAQ problems• Procurement and purchase of energy

commodity

The Problems

• Chemical pollutants from building or building maintenance materials

• Chemical pollutants from science and art classes

• Improperly maintained ventilation systems• Allergens from classroom animals and

cockroaches or pests• Mold growth• Outdoor air pollutants and pollens• Second hand smoke• Dust mites

For More Information...

Bob Barton Tel: 802.276.3846(Catalyst Financial Group, Inc.)rbarton@catalyst-financial.com

• The Cadmus Group, Inc. is an EPA contractor working for ENERGY STAR

• E-mail finance@cadmusgroup.com

• Call the ENERGY STAR Hotline at 1-888-STAR-YES (1-888-782-7937)

• Visit www.energystar.gov