Ohio School Facilities Commission

The Energy Conservation Program allows school districts to make energy efficiency improvements to their buildings and use the cost savings to pay for those improvements.

Frequently called the House Bill 264 Program (after the 1985 law that created this financing mechanism), the Energy Conservation Program gives districts the ability, in this one limited instance, to borrow funds without having to pass a ballot issue for the authority to borrow. This limited borrowing authority has given districts the ability to save millions in utility bills and operating costs, and all at no additional taxpayer expense.

Since the inception of the program, more than 500 Ohio school districts have taken advantage of this opportunity.

Program Components
Types of authorized improvements
Energy study (report)
Procedures used to contract for energy conservation measures
Financing the improvements

Types of authorized improvements

A system or equipment installation, modification or a remodeling of an existing building in order to reduce the energy consumption and operating costs. The term includes any of the following:

Insulation of the building structure and of systems within the building.
Storm windows and doors, multi-glazed windows and doors, heat-absorbing or heat-reflective glazed and coated window and door systems, additional glazing, reductions in glass area, and other window and door system modifications.
Automatic Energy Control System.
Heating, ventilating or air conditioning system modifications or replacements.
Caulking and weather-stripping.
Replacement or modification of lighting fixtures to increase the energy efficiency of the system without increasing the overall illumination of a facility, unless such an increase in illumination is necessary to conform for the applicable state or local building code for the proposed lighting system.
Energy recovery systems.
Co-generation systems that produce steam or forms of energy such as heat as well as electricity, for use primarily within a building or complex of buildings.
Any other modification, installation, or remodeling approved by the Ohio School Facilities Commission.

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Energy study (report)

A Board of Education must contract with a licensed Architect or Engineer or other person with proven relevant experience in the design and installation of energy conservation measures. A report containing analysis and recommendations of proposed energy conservation measures is to be developed. This report will form the foundation of the proposed energy conservation project.

These measures must significantly reduce energy consumption and operating costs.

The report shall include estimates of all costs of such measures and estimates of the amounts by which energy consumption and operating costs will be reduced.

It must include an analysis of existing energy usage patterns for the most recent one-year period (minimum of twelve months) to be used as a baseline for determining program energy savings.

The energy conservation measures must save in energy, operational and maintenance costs over fifteen years, an amount equal to or exceeding the cost of implementing the measurers.

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Procedures used to contract for energy conservation measures

Construction work for a Board of Education must be competitively bid, unless the local board of education, by a two-thirds majority vote, waives the necessity for competitive bidding as permitted by ORC Section 3313.46.

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Financing the improvements

A School District Board of Education may use any of the following:

Un-voted Indebtedness
After receiving Ohio School Facilities Commission approval, a Board of Education may incur indebtedness without a vote of the taxpayers. The debt may not exceed nine-tenths of one percent of the total property value of the district. Notes or bonds issued without a vote are subject to all appropriate state statutes and accounting requirements. Maturities of bonds issued solely for energy conservation measures shall not extend beyond fifteen years.

Installment Payment Contract
If the Board of Education chooses to pay for the improvements under an installment contract, competitive bidding is not required for the installation, modification or remodeling of energy conservation measures if the requirement is approved by a two-thirds vote of the Board.

Repayment must comply with the following conditions:

One fifteenth of the cost must be paid within the first two years from the date of purchase of the energy conservation measures.
The remaining balance must be paid within fifteen years from the date of the purchase of the energy conservation measures.

Notes may be issued to secure funds for the installment payments.

The interest rate on the notes is not to exceed the maximum interest rate (effective January 1, 1989) described in ORC Section 9.95.
The notes may contain conditions for pre payment and are not subject to ORC Sections 133.01 - 133.65 (The Uniform Bond Law).
Revenues derived from local taxes or otherwise, for the purpose of conserving energy or for defraying the current operating expenses of the district, may be applied to the payment of interest and to the retirement of the notes.
Notes may be sold at private sale or given to the contractor under the installment contract.
Debt incurred to secure funds for the installment payments is not included in the calculation of net indebtedness under ORC Section 133.04 but is accounted for separately.

Shared-savings contract
Shared-savings contracts provide specifically for that all payments are to be a stated percentage of the calculated savings of energy costs and that payments will be made only to the extent that such savings actually occur.

The legislation authorizes the use of shared-savings contracts for the acquisition and installation by means of purchase, lease, lease-purchase, or installment purchase of an energy conservation measure. Architectural and engineering consulting services related to energy conservation are also included.

A shared-savings contract may not extend beyond the initial term of fifteen years.

Shared-savings contracts are not subject to the competitive bidding requirements of the ORC Section 3313.46.

Two procedural requirements must be met for shared-savings contracts that extend beyond the first year in which they are entered:

The Board of Education must include in its annual appropriations measure for each subsequent year any amounts payable under shared-savings contracts during that year.
The Board must furnish the certification of available funds required by ORC Section 5705.44.

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