1. Financing for Energy Performance Contracts in Nevada February 6, 2014 Henderson, Nevada Presented by: Neal Skiver Green Campus Partners, LLC

2. Separate Statutes for Local Governments and State Agencies Local Governments  Statute – NRS 332  Flexibility Regarding Financing  A performance contract may be financed through a person other than the qualified service company  Must be structured as a true performance contract  Guaranteed annual saving must meet or exceed the total annual contract payments, including any financing charges  Contract Period  Must provide that all payments must be made over time.  Payments may extend beyond the fiscal year in which the performance contract becomes effective for costs incurred in future fiscal years Performance Contracts

3. Separate Statutes for Local Governments and State Agencies Local Governments (cont.)  Contract Period (cont.)  A performance contract may extend for a term not to exceed 15 years  Payments on a performance contract must not commence until the ECMs have been installed by the ESCO  Annual Appropriations  A performance contract must include a non-appropriations clause  Financial Guarantee  A performance contract must include appropriate financial mechanisms determined to be necessary to the city our county treasurer to ensure that the savings are achieved Performance Contracts

4. Separate Statutes for Local Governments and State Agencies State Agencies  Statute – NRS 333  Flexibility Regarding Financing  A performance contract may be financed through a person other than the qualified service company  May be structured as a true performance contract, under which annual saving must meet or exceed the total annual contract payments, including any financing charges  Alternatively, it may be structured as a shared-savings contract including provisions agreed upon between the agency and ESCO regarding rate of payments based on savings Performance Contracts

5. Separate Statutes for Local Governments and State Agencies State Agencies (cont.)  State may grant a security interest in any property subject to the installment-purchase or lease-purchase contract, including:  a deed of trust  a leasehold interest deed of trust  a mortgage  or, a financing agreement  State may offer Certificates of Participation (COPs)  Statute authorizes the State to enter into other beneficial agreements, including contracts for professional services (legal, etc.), trust indentures, paying agent agreements, insurance, etc.  Approvals Required  For State Agencies - State Board of Examiners  For Higher Education - Board of Regents of the University of Nevada Performance Contracts

6. Financing Options for Nevada Performance Contracts Could include a combination of:  Capital Funds  Grants, Incentives, Rebates  Existing Bond Proceeds  Other Capital Contribution  Bonds  General Obligation – backed by the full faith and credit of a governmental entity  Revenue – backed by a pledge of specific revenues  Medium Term Obligation  Limited to 10 years (depending on asset useful life)  Installment Purchase Agreement Local Government Financing

7. Installment Purchase Agreement Overview of an Installment Purchase Agreement  2 party transaction – local government and funding source  Annual appropriation obligation  Not technically debt, but...  Source of payments  Anticipated from savings, but technically from any lawfully available funds  Payment timing  Installation period, repayment period  Escrow funding  Local government responsibilities  Insurance  Maintenance  Prepayment options  Timing Financing Options

8. Installment Purchase Agreement Local Government Approval Process:  Local Governing Body (School Board, City Council, etc.)  At least 2 meetings are needed – preliminary and final  Public hearing required  Financing must be approved by 2/3rds majority of the governing body  Must identify sources of revenues that will be used to pay back the financing (i.e. guaranteed savings)  If the term is longer than 10 years, the Board must make a statement in the resolution comparing the cost of this financing method against other available methods of financing (General Obligation bonds, revenue bonds, etc.) Local Government Financing

9. Installment Purchase Agreement Local Government Approval Process:  Local Governing Body (cont.)  If this statement concludes that the costs of the installment purchase is more expensive that the other available method, the body must further make a statement explaining the reasons for choosing the installment purchased financing instead of a less expensive alternative.  If the term is longer than 10 years, the transaction must be approved by the local Debt Management Commission  Debt Management Commission (“DMC”)  County-wide body of elected governmental officials (county, city school district, etc.) and the public at large  Among other duties, responsible for reviewing and approving financing proposals from local governments Local Government Financing

10. Installment Purchase Agreement Local Government Approval Process:  Debt Management Commission (cont.)  Primary focus of the DMC relates to taxes  Annual appropriation installment purchase agreements do not raise taxes  Nevertheless, these transactions must be approved at an open DMC meeting  State of Nevada Department of Taxation (the “Department”)  Upon approval by the Debt Management Commission, the installment purchase agreement must be approved by the Department  The Department has a checklist for approving any local government financing transaction Local Government Financing

11. Installment Purchase Agreement Local Government Approval Process:  State of Nevada Department of Taxation (cont.)  Review of the official actions from the local governing board and DMC  Will not begin the review process until a preliminary resolution has been adopted by the local governing board  Review the local government’s financial position and ability to repay the obligation  The Department’s written approval must be read into the minutes of the local governing body Local Government Financing

12. At least 40 individual project financings completed since 1999 State/Local Governments Participants:  School Districts  Douglas County SD (2 Phases)  Lincoln County SD  Mineral County SD (QZABs)  Pershing County SD  Washoe County SD (6 Phases)  White Pine County SD  Cities  Carson City (2 Phases)  Henderson  Las Vegas (CREBs, QECBs)  Reno (3 Phases – QECBs, CREBs, etc.) Progress to Date

13. At least 40 individual project financings completed since 1999 State/Local Government Participants:  Counties  Pershing County  Washoe County (not financed)  Higher Education  UNLV (4 Phases)  Western Nevada Community College  State Agencies  Administration – Capitol Complexes  Corrections (Several Phases)  Health and Human Services  Other Entities  Las Vegas Valley Water District (CREBs)  Southern Nevada Water Authority (CREBs) Progress to Date (cont.)

14. Neal Skiver Managing Director Green Campus Partners, LLC 215 Lincoln Avenue Santa Fe, NM 87501 (732) 917-2311 - office (505) 690-3335 - mobile neal.skiver@greencampuspartners.com Contact Information