Funding Options for School Energy Work

By Norm Etkind, VSA SEMP Director

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Schools districts that want to save money by making their schools more energy-efficient face a difficult task but there are many entities and funding sources that can help them get through this process.

First, the overall nature and scope of a project needs to be determined. The Vermont Superintendents Association’s School Energy Management Program (SEMP) will visit a school and provide a written report that delineates potential energy savings at the facility. These recommendations may include operational changes as well as more capital intensive measures. All Vermont schools are eligible for this free service and a wide range of measures are considered, including those that save electricity as well as oil, gas, or wood. Contact SEMP via the phone number or e-mail address listed below. Vermont Gas can also help schools served by their system with initial assessments.

If there are significant energy saving measures to be pursued, a certain amount of engineering and/or architectural services may be needed. Efficiency Vermont can help with some limited grant funds for the purpose of coming up with a project scope. Also, the legislature allocated $50,000 to be used for school energy engineering assessment grants last session. The Department of Education will be issuing procedures to access these funds this fall.

Once the scope of the project is determined, Efficiency Vermont can provide technical feedback, additional recommendations and information on the amount of their incentive payment that will contribute to the project cost. The school may opt to go with a performance contractor to do the work or decide to go forward on their own. A performance contractor will guarantee savings and manage the project for the school district. They are typically only interested in larger school districts.

While there is currently a suspension in effect for state construction aid, there are several other potential avenues to pursue for project funding:

• Community Facilities Grants - Some schools are eligible for funding under this USDA Rural Development Program. General information can be obtained at: http://www.rurdev.usda.gov/VT/vtnhcf.htm. A listing of town eligibility can be found at: http://www.rurdev.usda.gov/VT/VT%20Census%20List%20for%20Web.pdf. I suggest first checking for eligibility so you don’t waste your time if your community will not be able to get support. The maximum percentage grant is 75% of costs (but few towns are eligible for this high percentage).
• Bonding and Municipal Leasing - School districts can obtain project funds either by bonding or by obtaining a municipal lease. They both carry somewhat similar (low, tax exempt) interest rates. Current rates for a ten year term are about 3.5% and twenty year terms are available at 4.5%.

  The primary source for school districts to obtain bond funding is the Vermont Municipal Bond Bank (www.vtbondagency.org). Most school business managers are familiar with the bonding mechanism. The bond bank also has a program to assist school districts looking to go to bid to obtain a municipal lease for their project.

  For energy projects, you can enter into a municipal lease that generally has you pay an annual amount for the use of the equipment and obtain ownership of the equipment at the end of the lease period. A "non-appropriations clause" is included in the agreement that gives the leasing company the right to remove the collateralized equipment in the event of non-payment of the lease (an eventuality that is unlikely in the case of a school). Schools have used this mechanism to acquire everything from light fixtures, to boilers, to control systems. If certain criteria are met, the school district does not need to include the lease amount as "debt" and will not need a vote of the electorate to enter into this agreement. Check with your counsel to clarify exactly how the law applies and what these criteria are for your project. For smaller projects and for smaller school districts that don’t generally have a CPA performed audit, leasing may be a better option. For more information about these options, I suggest you contact Bob Giroux at the bond bank (802-223-2717).

• Solar Hot Water and Electricity - There is an incentive program for the installation of solar domestic hot water systems and photovoltaics for schools. This program is administered by the Renewable Energy Resource Center at Vermont Energy Investment Corporation. Schools are eligible for incentives of $1.75 per Watt for solar electric systems and $1.75 per 100 Btu/d for solar hot water systems, to a maximum of $8,750 for both.
• QZAB Program - Qualified Zone Academy Bond - This program provides tax credits to the issuer of the bond for the school district. The net result is that the school can get an interest free loan for their project. There are income based eligibility criteria and many hoops to go through. For general information go to www.qzab.org. For specific information contact Cathy Hilgendorf, Construction Aid Coordinator for the Vermont Department of Education 828-5402.

We are also planning a complete Building Operator Certification training course fo rthis fall. Please consider sending your school’s facilities manager to learn about efficient building operations.

The SEMP program is happy to provide advice on your energy saving program and funding. We can be contacted at 229-1017 or by email at SEMP@VTVSA.org.

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