H.F. _____ Section 1. NEW SECTION . 297A.1 Legislative intent. 1 The general assembly finds that investment in energy 2 conservation measures by public facilities can reduce 3 the amount of energy and other resources consumed by the 4 facilities; reduce ongoing operational costs; improve comfort, 5 reliability, and the indoor environment for employees and 6 citizens; produce a positive environmental impact; enhance 7 revenues generated by governmental units; and create local 8 jobs, producing both immediate and long-term cost savings and 9 other benefits. It is the policy of this state to encourage 10 state agencies, departments, and divisions; public health 11 facilities; public universities and community colleges, 12 school districts, and area education agencies; and counties, 13 municipalities, and other political subdivisions to implement 14 energy conservation and facility improvement measures that 15 reduce energy, water, wastewater, or any other utility or 16 operating costs, and, when economically feasible, build, 17 operate, maintain, or renovate public facilities and systems 18 in a manner that will minimize operational costs and maximize 19 utility savings and other efficiencies. It is additionally the 20 policy of this state to encourage reinvestment of the savings 21 and revenues resulting from energy conservation measures into 22 additional and continued energy conservation efforts through 23 performance-based efficiency contracts and other measures 24 deemed appropriate by a governmental unit. 25 Sec. 2. NEW SECTION . 297A.2 Definitions. 26 As used in this chapter, unless the context otherwise 27 requires: 28 1. “Energy conservation measure” or “facility improvement 29 measure” means a program, facility alteration, equipment 30 installation, remodeling of a new or existing building, or 31 technology upgrade, which is designed to reduce energy, water, 32 wastewater, or other utility or operating costs, or enhance 33 billable revenue, including but not limited to the following: 34 a. Employee training and occupant behavior modification 35 -1- LSB 5768YC (7) 84 rn/nh 1/ 10

H.F. _____ programs. 1 b. Insulation of building structures and systems within 2 buildings. 3 c. Windows and window systems, roofs and roofing materials, 4 caulking or weather stripping, installation or modification of 5 doors, heat-absorbing or heat-reflecting applications, or other 6 modifications to windows, doors, or the building envelope, that 7 reduce energy and operating costs. 8 d. Automated or computerized energy or facility control 9 systems. 10 e. Heating, ventilation, and air-conditioning systems, 11 including specialty systems serving food service, laboratory, 12 and other applications. 13 f. Lighting systems and fixtures, including daylighting 14 systems. 15 g. Energy recovery systems. 16 h. Systems that produce steam or forms of energy such as 17 heat in addition to electricity. 18 i. Renewable energy systems or other distributed power 19 generation systems. 20 j. Water and wastewater fixtures, appliances, and equipment. 21 k. Improvements to water distribution, sewer, and wastewater 22 treatment facilities. 23 l. Landscaping measures that reduce watering demands and 24 capture and hold applied water and rainfall. 25 m. Metering or related equipment or systems that improve the 26 accuracy or efficiency of billable revenue-generating systems. 27 n. Automated, electronic, or remotely controlled 28 technologies, systems, or measures that reduce operating costs. 29 o. Installation and modification of software-based systems 30 that reduce facility management or other facility operating 31 costs. 32 p. Programs to reduce energy costs through rate adjustments, 33 load shifting to reduce peak demand, or use of alternative 34 energy suppliers, including but not limited to demand response 35 -2- LSB 5768YC (7) 84 rn/nh 2/ 10

H.F. _____ programs, changes to more favorable rate schedules, negotiation 1 of lower rates or new suppliers, or auditing of utility billing 2 and metering. 3 q. Energy information and control systems that monitor 4 consumption, redirect systems to optimal energy sources, and 5 manage energy-using equipment. 6 r. Any measure not otherwise described in this chapter that 7 is designed to produce utility consumption or operational cost 8 savings, revenue enhancements, or similar efficiency gains to a 9 governmental unit. 10 2. “Governmental unit” means any authority, board, bureau, 11 commission, department, agency, or institution of a government 12 agency, including but not limited to any state agency, or any 13 county, city, district, municipal corporation, municipality, 14 municipal authority, political subdivision, school district, 15 educational institution, incorporated town, township, other 16 incorporated district, or other public instrumentality 17 which has the authority to contract for the construction, 18 reconstruction, alteration, or repair of any public building or 19 other public work or public improvement. 20 3. “Performance-based efficiency contract” means a contract 21 between a governmental unit and a qualified provider for 22 the evaluation and recommendation of energy conservation or 23 facility improvement measures and for implementation of one or 24 more such measures. 25 4. “Qualified provider” means a person with a record of 26 documented performance-based efficiency contract projects who 27 is experienced in the design, implementation, and installation 28 of energy conservation or facility-improvement measures; and 29 has the technical capabilities to verify that such measures 30 generate energy and operational cost savings or enhanced 31 revenues. A “qualified provider” provides a governmental unit 32 with the following information and services in connection with 33 a performance-based efficiency contract: 34 a. Project design and specifications. 35 -3- LSB 5768YC (7) 84 rn/nh 3/ 10

H.F. _____ b. Construction and construction management. 1 c. Commissioning. 2 d. Ongoing services as required. 3 e. Measurement, verification, and guarantee of savings from 4 energy conservation or facility-improvement measures. 5 Sec. 3. NEW SECTION . 297A.3 Selection of qualified provider 6 —— award of performance-based contract —— contracting procedures 7 and provisions —— funding. 8 1. A governmental unit may enter into a performance-based 9 efficiency contract with a qualified provider in accordance 10 with the provisions of this chapter. If, in accordance with 11 applicable law, the award of a contract by a governmental 12 unit requires action at a public meeting, a governmental 13 unit may award a performance-based efficiency contract at 14 a public meeting if it has provided public notice in the 15 manner prescribed under chapter 21, and the notice shall 16 include the names of the parties to the proposed contract 17 and the purpose of the contract. For governmental units 18 that are not required to take actions on contracts at public 19 meetings, the governmental unit may award a performance-based 20 efficiency contract in accordance with the procedures 21 adopted by the governmental unit and the requirements of all 22 applicable laws. However, notwithstanding the provisions of 23 chapter 8A, subchapter III, chapter 26, or other provisions 24 of law relating to the awarding of public contracts, this 25 chapter shall constitute the sole authority necessary for a 26 governmental unit to select a qualified provider and enter into 27 a performance-based efficiency contract. 28 2. A governmental unit may select a qualified provider 29 that best meets the needs of the governmental unit in 30 accordance with criteria established by the governmental 31 unit. After reviewing the qualifications of one or more 32 qualified providers, a governmental unit may enter into a 33 performance-based efficiency contract with a qualified provider 34 if it finds that the amount the governmental unit would spend 35 -4- LSB 5768YC (7) 84 rn/nh 4/ 10

H.F. _____ on the energy conservation and facility-improvement measures 1 recommended in the proposal would not exceed the amount of 2 energy and operational cost savings or revenue enhancements 3 derived from the measures within a twenty-year period from the 4 date of installation. 5 3. A qualified provider to whom a performance-based 6 efficiency contract is awarded shall provide a one hundred 7 percent performance bond to the governmental unit to assure the 8 provider’s faithful and complete performance of the contract. 9 4. a. A performance-based efficiency contract shall 10 include a written guarantee by the qualified provider that 11 the savings and efficiency gains, in the aggregate, will meet 12 or exceed the cost of the energy conservation or facility 13 improvement measures to be implemented under the contract. 14 The qualified provider shall be responsible, pursuant to the 15 performance-based efficiency contract, for measuring and 16 verifying the guaranteed savings and efficiency gains provided 17 by the implemented measures by using one of the measurement 18 and verification methodologies set forth in the international 19 performance measurement and verification protocol. If, due to 20 existing data limitations or the nonconformance of specific 21 project characteristics, none of the methods listed in the 22 international performance measurement and verification protocol 23 is sufficient for measuring guaranteed savings and efficiency 24 gains, the qualified provider shall develop and document an 25 alternate method that is compatible with the protocol. 26 b. The performance-based efficiency contract shall 27 provide for reimbursement by the qualified provider to the 28 governmental unit for any shortfall of guaranteed savings 29 and efficiency gains. Savings and efficiency gains shall be 30 measured, verified, and documented by the qualified provider, 31 at a minimum, during each of the first three years following 32 completion of installation of the improvement measures, after 33 which time the governmental unit may elect, at its discretion, 34 to discontinue the measurement, verification, and documentation 35 -5- LSB 5768YC (7) 84 rn/nh 5/ 10

H.F. _____ services and associated guarantee. 1 5. An improvement that is not causally connected 2 to an energy conservation measure may be included in a 3 performance-based efficiency contract if the value of the 4 improvement does not exceed fifteen percent of the total value 5 of the performance-based efficiency contract, and either the 6 improvement is necessary to conform to a federal, state, or 7 local law, rule, or ordinance, or an analysis within the 8 performance-based efficiency contract demonstrates that there 9 is an economic advantage to the governmental unit implementing 10 the improvement as part of the performance-based efficiency 11 contract. 12 6. A facility alteration which includes expenditures that 13 are required to properly implement other energy conservation 14 measures may be included as part of a performance-based 15 efficiency contract. In such a case, notwithstanding any other 16 provision of law, the installation of these additional measures 17 may be supervised by the qualified provider. 18 7. A governmental unit may enter into a third-party 19 installment payment or lease-purchase agreement to finance 20 the costs associated with the performance-based efficiency 21 contract. The installment payment or lease-purchase agreement 22 may provide for payments over a period of time not to exceed 23 twenty years commencing on the completion of installation 24 of the energy conservation measures. Notwithstanding any 25 other provision of law to the contrary, a governmental unit 26 may use funds designated for operating, utility, or capital 27 expenditures to fund any performance-based efficiency contract, 28 including, without limitation, funding any installment payment 29 or lease-purchase agreement. Payments under an installment 30 payment or lease-purchase agreement for energy conservation 31 measures shall not constitute indebtedness of the governmental 32 unit within the meaning of a constitutional or statutory debt 33 limitation, nor shall such payments constitute a tax-supported 34 obligation. 35 -6- LSB 5768YC (7) 84 rn/nh 6/ 10

H.F. _____ 8. Any amount of the performance-based efficiency contract 1 or installment payment or lease-purchase agreements costs that 2 is guaranteed by the qualified provider shall be excluded from 3 any limits or requirements imposed by sections 297.36, 331.402, 4 and 384.24A. 5 EXPLANATION 6 This bill authorizes governmental units to enter into 7 performance-based energy contracts. 8 The bill provides legislative intent detailing the benefits 9 of investment in energy conservation measures and identifying 10 a state policy of encouraging governmental units to implement 11 energy conservation and facility improvement measures that 12 reduce utility or operating costs and maximize utility savings 13 and other efficiencies, and to reinvest resulting savings and 14 revenues into additional and continued energy conservation 15 efforts through performance-based efficiency contracts and 16 other appropriate measures. 17 The bill provides several definitions. The bill defines 18 an “energy conservation measure” or “facility improvement 19 measure” to mean a program, facility alteration, equipment 20 installation, remodeling of a new or existing building, or 21 technology upgrade, which is designed to reduce energy, water, 22 wastewater, or other utility or operating costs, or enhance 23 billable revenue. The bill provides a nonexclusive listing 24 of specified actions or measures encompassed within the 25 definition. The bill defines a “governmental unit” to mean any 26 authority, board, bureau, commission, department, agency, or 27 institution of a government agency, including but not limited 28 to any state agency, or any county, city, district, municipal 29 corporation, municipality, municipal authority, political 30 subdivision, school district, educational institution, 31 incorporated town, township, other incorporated district, 32 or other public instrumentality which has the authority to 33 contract for the construction, reconstruction, alteration, or 34 repair of any public building or other public work or public 35 -7- LSB 5768YC (7) 84 rn/nh 7/ 10

H.F. _____ improvement. The bill defines a “performance-based efficiency 1 contract” to mean a contract between a governmental unit and 2 a qualified provider for the evaluation and recommendation of 3 energy conservation or facility improvement measures and for 4 implementation of one or more such measures. The bill defines 5 a “qualified provider” to mean a person with a record of 6 documented performance-based efficiency contract projects who 7 is experienced in the design, implementation, and installation 8 of energy conservation or facility improvement measures; and 9 has the technical capabilities to verify that such measures 10 generate energy and operational cost savings or enhanced 11 revenues. 12 The bill provides that if awarding a contract by a particular 13 governmental unit requires action at a public meeting, a 14 governmental unit may award a performance-based efficiency 15 contract at such a meeting, if it has provided public notice 16 in the manner prescribed under applicable law relating to open 17 meetings, and the notice shall include the names of the parties 18 to the proposed contract and the purpose of the contract. 19 For governmental units that are not required to take actions 20 on contracts at public meetings, the bill provides that the 21 governmental unit may award a performance-based efficiency 22 contract in accordance with the procedures adopted by the 23 governmental unit and the requirements of all applicable 24 laws. The bill states that, notwithstanding provisions in 25 chapter 8A or 26, or other provisions relating to the awarding 26 of public contracts, new Code chapter 297A contained in the 27 bill shall constitute the sole authority necessary for a 28 governmental unit to select a qualified provider and enter into 29 a performance-based efficiency contract. 30 The bill provides that after reviewing the qualifications 31 of one or more qualified providers, a governmental unit may 32 enter into a performance-based efficiency contract with a 33 qualified provider if it finds that the amount it would spend 34 on the energy conservation and facility improvement measures 35 -8- LSB 5768YC (7) 84 rn/nh 8/ 10

H.F. _____ recommended in the proposal would not exceed the amount of 1 energy and operational cost savings or revenue enhancements 2 derived from the measures within a 20-year period from the date 3 of installation. A qualified provider to whom a contract is 4 awarded shall be required to provide a 100 percent performance 5 bond to the governmental unit to assure the provider’s faithful 6 and complete performance of the contract. The bill provides 7 that a contract shall include a written guarantee by the 8 qualified provider that the savings and efficiency gains, in 9 the aggregate, will meet or exceed the cost of the energy 10 conservation or facility improvement measures to be installed 11 under the contract. The bill specifies that the qualified 12 provider shall be responsible, pursuant to the contract, for 13 measuring and verifying the guaranteed savings and efficiency 14 gains provided by the installed measures by using one of 15 the measurement and verification methodologies set forth in 16 the international performance measurement and verification 17 protocol. The bill provides that the contract shall provide 18 for reimbursement by the qualified provider for any shortfall 19 of guaranteed savings and efficiency gains, and that such 20 savings and gains shall be measured, verified, and documented 21 by the qualified provider, at a minimum, during each of the 22 first three years following completion of installation of the 23 improvement measures. 24 The bill states that an improvement that is not causally 25 connected to an energy conservation measure may be included in 26 a performance-based efficiency contract if the total value of 27 the improvement does not exceed 15 percent of the total value 28 of the contract, and either the improvement is necessary to 29 conform to a federal, state, or local law, rule or ordinance, 30 or an analysis within the performance-based efficiency contract 31 demonstrates that there is an economic advantage to the 32 governmental unit implementing the improvement as part of the 33 contract. 34 The bill specifies that a facility alteration which includes 35 -9- LSB 5768YC (7) 84 rn/nh 9/ 10

H.F. _____ expenditures that are required to properly implement other 1 energy conservation measures may be included as part of 2 a performance-based efficiency contract. In such a case, 3 notwithstanding any other provision of law, the bill provides 4 that the installation of these additional measures may be 5 supervised by the qualified provider. 6 The bill authorizes a governmental unit to enter into a 7 third-party installment payment or lease-purchase agreement 8 to finance the costs associated with the performance-based 9 efficiency contract. The bill states that a governmental unit 10 may use funds designated for operating, utility, or capital 11 expenditures to fund any performance-based efficiency contract, 12 including, without limitation, any installment payment or 13 lease-purchase agreement, and that payments under such an 14 agreement shall not constitute indebtedness of the governmental 15 unit within the meaning of a constitutional or statutory debt 16 limitation, nor shall such payments constitute a tax-supported 17 obligation. 18 The bill provides that any amount of the contract or 19 agreement costs that is guaranteed by the qualified provider 20 shall be excluded from any limits or requirements imposed by 21 Code section 384.24A dealing with loan agreements entered into 22 by cities, Code section 331.402 dealing with county powers 23 relating to finances, and Code section 297.36 dealing with 24 school district loan agreements. 25 -10- LSB 5768YC (7) 84 rn/nh 10/ 10