§ 3448f — Energy performance contracting; authorization; State aid

(a) Definitions. As used in this section:
(1) “Cost-saving measure” means any facility improvement, repair, or alteration or any equipment, fixture, or furnishing to be constructed or installed in any facility that is designed to reduce energy consumption and operating costs or to increase the operating efficiency of facilities for their appointed functions, that is cost effective, and that is further defined by State Board rule.
(2) “District” means a district or independent school eligible for assistance under section 3447 of this title.
(3) “Energy and operational cost-savings” means any expense that is eliminated or decreased on a long-term basis as a result of any cost-saving measure, but does not include shifting personnel costs or similar short-term cost-savings.
(4) “Performance contract” means a contract for the valuation, recommendation, and implementation of one or more cost-saving measures for the purpose of realizing energy and operational cost-savings where payment by the district is contingent on energy or operational cost-saving results.
(b) Authorization. Notwithstanding any provision of law to the contrary, a district may enter into a performance contract pursuant to this section for a period not to exceed 20 years. Cost-saving measures implemented under the contract shall comply with all State and local building codes.
(c) Selection of qualified contractor.
(1) Request for proposals. The district shall issue a request for proposals from individuals or entities interested in entering into a performance contract (who shall become the “contractor”), shall consider the proposals, and shall select a qualified contractor to engage in final contract negotiations. In developing the request for proposals and in selecting a qualified contractor, the district should make use of any assistance available from Efficiency Vermont, the School Energy Management Program of the Vermont Superintendents Association, and other similar entities. Factors to be considered in the final selection shall include contract terms, comprehensiveness of the proposal, comprehensiveness of cost-saving measures, experience of the contractor, quality of technical approach, and overall benefits to the district.
(2) Financial grade audit. The person selected pursuant to this subsection shall prepare a financial grade energy audit that, upon acceptance by the district, shall be part of the final performance contract executed with the district. If after preparation of the financial grade energy audit the district decides not to execute a performance contract with the contractor, the district shall pay the qualified contractor for costs incurred in preparing the financial grade energy audit. If, however, the district decides to execute a performance contract with the contractor, the costs of the financial grade energy audit shall be part of the costs of the performance contract.
(3) [Repealed.]
(d) Installment payment and lease-purchase agreements. A district may enter into a performance contract structured as an installment payment contract or lease-purchase agreement for the purchase and installation of cost-saving measures. Financing implemented through the contractor or a person other than the contractor is authorized.
(e) Payment schedule and savings. Each performance contract shall provide that all payments between parties, except obligations on termination of the contract before its expiration, shall be made over time, and that the objective of the performance contract is implementation of cost-saving measures and energy and operational cost-savings.
(f) State funding for energy conservation measures.
(1) Application for construction aid. A district that intends to construct or install cost-saving measures under a performance contract and wishes to receive State school construction aid in connection with those measures shall submit a written application to the Secretary that:
(A) specifies the need for and purpose of the project, including details of the cost-saving measure or measures proposed;
(B) provides details concerning the qualifications of the person with whom the district has entered or intends to enter into a performance contract and concerning the district’s adherence to the selection process required by subsection (c) of this section, including detailed information regarding the assistance received from Efficiency Vermont, the School Energy Management Program, and similar entities;
(C) provides detailed information concerning the energy and operational cost-savings projected to result from the proposed cost-saving measures;
(D) provides detailed information concerning the amount and schedule of payments to be made under the terms of the performance contract; and
(E) provides any other information the Secretary deems necessary for consideration of the application.
(2) Approval of application. After consultation with the Department of Buildings and General Services and any other expert resources that may be available, including Efficiency Vermont and the School Energy Management Program, the Secretary may approve a complete application.
(3) Priorities. Following approval of a district’s application, the State Board shall assign points, established by Board rule, to the project so that the project can be placed on a priority list distinct from but similar to the list established under section 3448 of this title, based on the number of points received. Once a project receives points, if it does not receive funding in a given year, it shall not lose points in subsequent years and, pursuant to Board rule and provided the scope of the project remains the same, it shall gain points due to the length of time on the list and may gain points for any other reason. Prioritized projects under this section shall be included in the State Board’s request for legislative appropriation as a separate and distinct line item under section 3448 of this title. Any legislative appropriation made to fund the line item for performance contracts shall not exceed 20 percent of the appropriation made in the same year to fund State aid for school construction under section 3448.
(4) Award of State aid. A district shall not be reimbursed for debt incurred due to borrowing funds in anticipation of aid under this section. The total amount of an award shall be 20 percent of the approved total cost of the project, provided the total award shall not exceed the total payment that would be due from the district, less interest.
(5) Eligible costs. A project or portions of a project under this section shall be eligible for aid pursuant to criteria established by State Board rule.
(6) Payment. Upon completion of the construction or installation of the cost-saving measure, determination by the Department of Buildings and General Services that implementation of the cost-saving measures is expected to result in energy and operational cost-savings, and legislative appropriation sufficient to fund the State aid due under this section, the State Board shall certify an award for the project to the Commissioner of Finance and Management who shall issue a warrant for the payment of the award. A district awarded State aid under this section shall use the State aid solely for the purpose of paying all or a portion of the obligation due under the performance contract at the time the award is received.
(g) Refund upon sale. Upon the sale by a district of any energy-saving measure or building in which an energy-saving measure was constructed or installed, for which State aid was awarded under this section, the district shall refund funds equal to the aid received. All refunds shall be deposited with the State Treasurer and used for awards under this section and section 3448 of this title. No district shall receive any State general aid unless the district complies with this subsection. (Added 2003, No. 121 (Adj. Sess.), § 58, eff. June 8, 2004; amended 2013, No. 92 (Adj. Sess.), § 219, eff. Feb. 14, 2014; 2021, No. 20, § 65; 2025, No. 72, § 14, eff. June 27, 2025.)