November 5, 2009 71 LCB03
Sponsored by: Rodrigo Gonzalez Finance Board Chair
Paul Lichty Legislative Council Vice-President
Tom Higginbotham Tri-Executive
Daniel Ramos Tri-Executive
Siobhan Collins Environmental Board Chair
Will Taylor Represenative-at-Large
Blaine Pellicore Legislative Council President
Andrew Lanius Representative-at-Large
Rebecca Aquilar Representative-at-Large
Authored by: Dan Omasta UCSU Sustainability Director
Dave Newport Environmental Center Director
A Bill to Expand Eligibility of the UCSU Energy and Climate Revolving Fund
Bill History
UCSU in January of 2007 became the first student government in the nation to commit to a climate neutrality plan for student-run
buildings. In February of that year, CU’s Chancellor also signed onto the national campaign to transition the campus to carbon neutrality.
In April of 2007, UCSU approved and funded (66LCB10) the creation of the Energy and Climate Revolving Fund (ECRF) to provide funding tools for UCSU cost centers seeking to lower energy costs and carbon emissions. A onetime SOR earmark of $500,000 was approved and the Environmental Center charged with managing the ECRF under the terms of the authorizing legislation that restricts the use of these funds to UCSU units.
Since that time, the ECRF has loaned over $267,000 for energy efficiency projects in the Big Three cost centers. These loans are projected to result in over $41,000 in energy costs savings per year for UCSU cost centers for year going forward. This represents a 15.5% annual Return on Investment (ROI).
The revolving fund concept is based on similar funds also found to be successful at other institutions and government agencies. The revolving fund makes low interest loans for high return-on-investment energy and climate projects—and the fund is paid back from the savings accrued by those projects. Thus, the loans represent a ‘zero sum game’ for the participating units.
Likewise, the energy projects are essentially ‘zero-cost’ and the fund remains fully endowed over time. Importantly, the revolving fund needs only to be funded once—it does not require any recurring annual allocations.
Currently, the ECRF is 53% subscribed and has over a $300,000 available balance. The goal is to increase loans to enable about an 80% subscription rate. This is seen as a good target such that the funds are being used to create cost savings –while at the same time maintaining a sufficient fund balance such that new loan applications can be funded.
This bill details an expansion of the applicability into other campus units including general fund and auxiliaries such that similar cost savings and carbon reduction can be stimulated in those areas and continue UCSU’s national leadership in this arena.
Bill Summary
This bill expands the authority of the Energy and Climate Revolving Fund through the amendment of the Energy and Climate Revolving Fund Code.
THEREFORE BE IT ENACTED:
Section 1: The Legislative Council adopts the following as the Energy and Climate Revolving Fund Code:
Energy and Climate Revolving Fund Code
CHAPTER 1- GENERAL PROVISIONS
101: Creation of the Energy and Climate Revolving Fund
(a) The University of Colorado Student Union hereby broadens the authority of the Energy and Climate Revolving Fund created by UCSU in 66LCB10 on April 12, 2007; referred herein as the Energy and Climate Revolving Fund or “ECRF”. The ECRF is authorized to allocate the funds it receives from the Supplemental Operating Reserve (SOR).
(b) The ECRF Board of Directors shall be made up of the following:
(1) Three UCSU Facility Managers
(2) The Facilities Management Resource Conservation Director
(3) The Environmental Center Director
(4) A Faculty member appointed by the Provost
(5) The SOFO Director
(6) The UCSU Finance Board Chair
(7) A member of Legislative Council nominated by the President of Legislative Council, ratified by a majority present and voting.
(8) An Executive appointment, ratified by a majority of Legislative Council present and voting.
(9) Two Students-At-Large appointed by the Board and ratified by Legislative Council by a majority present and voting.
(10) The HDS facility director
(11) The PTS fleet director
102: Purpose
(a) The ECRF is responsible for allocating funds received from SOR for energy efficiency and climate action projects at the University of Colorado.
CHAPTER 2- ECRF MEMBER DUTIES AND RESPONSIBILITIES
201: ECRF Chair & Vice Chair
(a) The ECRF will be chaired by the Finance Board Chair.
(b) The ECRF will elect a Vice Chair from its membership. The Vice Chair shall be elected by a majority, present and voting, of the ECRF.
(c) The Chair shall prepare meeting agendas, preside over meetings, and issue written decisions of the ECRF.
(d) The Vice Chair shall perform the duties of the Chair is his/her absence.
(e) The Vice Chair shall coordinate an orientation and education of new ECRF members.
202: Recording Secretary
(a) The Chair shall ensure that minutes are prepared and made available in the UCSU office within 5 business days of all ECRF meetings.
203: Member Duties
(a) Each member shall attend all scheduled ECRF meetings, unless a proxy is designated from the membership described in 101: b 1-8.
204: Membership Vacancies
(a) Vacancies shall be filled based on 101: b 1-8.
205: Member Removal
(a) Members may only be removed for good cause. This includes, but is not limited to, failure to substantially perform one’s duties, financial impropriety, violating the UCSU Constitution, the Student Fee Regulations, or this Code.
(b) The executive appointment and the member of Legislative Council can be removed based on 2/3 vote of the ECRF Board.
(c) The other members of ECRF can be removed based on majority vote of the entire council.
206: Student-At-Large Member Qualifications
(a) Students who fill the three at large positions shall have technical experience, academic or employment related, in a field which is relevant to the ECRF in some way. These include, but are not limited to students studying Environmental Studies, Civil Engineering, and Corporate Finance.
(b) Whether a candidate possesses the technical experience necessary shall be determined by the ECRF during their new member interview and recommendation process.
CHAPTER 3- MEETINGS
301: Quorum
(a) Quorum shall consist of a majority of the currently filled positions on the ECRF Board.
302: Roberts Rules of Order
(a) Meetings shall be run according to the version of Robert’s Rules of Order used by the Legislative Council, unless an alternate method is specified in this code or in regulation promulgated by the ECRF.
303: Absence of Chair and Vice Chair
(a) In the absence of the Chair and the Vice Chair the most senior member of the ECRF shall preside over ECRF meetings.
CHAPTER 4 - PROPOSAL FUNDING ELIGIBILITY
401: Eligibility
(a) Proposals based on energy and climate projects are infrastructure or behavioral efforts that reduce energy use and/or increase renewable energy supply, or create carbon emission reductions while reducing costs.
(b) Deferred maintenance items are not included in this definition
(c) A predicted ROI of 5 years or less; or, alternatively, projects may be bundled together in order to achieve an ROI of 5 years or less. In determining whether bundled projects exhibit an appropriate payback, the cash flows will be added together and treated as one project in the payback calculation. Examples of high ROI projects include lighting upgrades, insulation, and HVAC enhancements.
An example of a bundled payback calculation is as follows:
Project A: Initial Investment: <$25,000>
Cash Flow $5,000 per year
Project B: Initial Investment: <$50,000>
Cash Flow: $20,000 per year
Bundled: Initial Investment <$75,000>
Cash Flow: $25,000 per year
Discounted payback: 3.58 years
*The bundled project would qualify, whereas Project A would not have qualified previously.
(d) In addition to the ROI requirements, the project shows positive environmental performance characteristics.
(e) The project involves students in conceptualization, design, implementation, monitoring, or follow up/education. While not a prerequisite for eligibility, the greater the student involvement, the more fundable the project is when all other factors are equal
(f) Only those projects/programs resident in UCSU facilities and/or as part of programs operated by a UCSU cost center in non-UCSU on-campus facilities (e.g. the recycling center) are eligible for 100% funding. Projects in general fund or auxiliary units must include significant in-kind or monetary match funding. The nature and extent of the matched funding must be sufficient to win two-thirds approval of the ECRF Board. In no case may projects in general fund or auxiliary units receive 100% funding from ECRF. Some match funding must always be part of the project.
(g) The facility in which the project is undertaken shall have the final decision in whether to undertake the project. The facility may require any burden of proof as to whether the project truly will generate positive cash flows; Obtaining this proof will be the responsibility of the Cost Center and not the Board. The Board shall thoroughly review every proposal and must agree by a two-thirds majority present and voting that the project will generate net positive cash flows as based on their prior knowledge and what is provided by the Cost Center.
(h) Applicants may seek funding of a up to $20,000 for feasibility studies that support energy and climate projects from the fund. Feasibility study loans must either be paid back within two (2) years or rolled into the repayment schedule of a funded ECRF project that results from the feasibility assessment. The Board must vote to fund feasibility studies by a two-thirds majority of those present and voting.
CHAPTER 5- APPLICATION AND APPROVAL
501: Applications
(a) A form will be made available by the Environmental Center that details required information for a complete proposal.
(c) Once deemed complete by the Environmental Center, the proposal will be entertained by the ECRF Board at their next meeting.
502: Board Approval
(a) Applications will be considered approved based on a affirmative vote of a two-thirds majority of quorum.
(b) If approved, funding will be made available upon satisfactory execution of the ECRF Repayment Agreement. Facilities must commit to a strict repayment schedule before any funds will be made available.
(c) Any tie will be broken by the chair’s vote.
(d) Any ECRF Board member must recues themselves when the Board is reviewing proposals under control of those member’s facilities or programs.
(e) The ECRF Board will develop a policy by which to assure that, when all things are equal, UCSU proposals are given priority over non-UCSU proposals.
CHAPTER 6-MAINTANCE OF THE FUND
601: Fund Maintenance
(a) The UCSU Energy and Climate Revolving Fund (the Fund) will be endowed as a near-zero net-interest revolving loan fund that capitalizes energy and climate projects with favorable Returns on Investment (ROI).
(b) The fund shall receive payments from the facility in which the improvement is made, and these will be discounted based on inflation and opportunity cost. The fund endowment thus remains whole in real dollar terms in perpetuity.
(c) The Fund is staffed and administered by the UCSU Environmental Center Energy Program Manager but funding decisions are made by the Fund’s Board of Directors.
(d) Funded proposals will be required to sign a Repayment Agreement with the ECRF that details the prescribed repayment schedule and all funding requirements.
For example, if a $100,000 project with a five year ROI is funded, the Repayment Agreement would state the repayment schedule to fulfill the total owed (estimated):
$100,000 principal (payments discounted at an 8% rate and repayment over 5 years) yields a payment of $25,045.60 per year.
(This will grow the fund at a slight rate so that it will not lose purchasing power because of inflation.)
Repayment agreements with general fund and auxiliary units will not include an “interest” payment. Instead, the equivalent interest charges will be itemized as an “administrative fee.”
(e) The repayments thus obligated under this legislation are considered ‘unduckables’ for the cost centers until the Repayment Agreement is fulfilled.
(f) It is usually not possible to measure whether an energy efficiency project is successful in terms of generating the cash flows that are expected when the project is undertaken. No matter the apparent result of a project, the affected cost center will continue to repay the ECRF based on the repayment schedule determined prior to the project’s implementation.
(g) The discount rate used to determine payments to the Fund shall be stipulated by the Director of SOFO and shall be based upon the opportunity cost of the funds not being invested by the CU office of the Treasury. The only exception to this rule is if a third party vendor identifies a more appropriate discount rate for a specific project.
(h) Repayment schedules shall include the general administrative costs that are associates with administering the Fund. These shall include but are not limited to employment costs of a student coordinator and the costs of a third party vendor energy efficiency project identification study.
An example of including administrative costs in a discounted payback calculation is as follows:
Initial size of fund: $500,000
Cost of a third party vendor: $50,000
Project A:
Initial outlay: $100,000
Cashflow: $35,000 per year
*Since $100,000 is 20% of $500,000, 20% of the cost of the third party study will be included in the initial outlay for Project A. This is $10,000, making the total outlay, $110,000.
Project A adjusted:
Initial outlay: $110,000
Cashflow: $35,000
Payback: 3.77 years (project qualifies)
CHAPTER 7-LONG-TERM SAVINGS
701: Savings allocation
(a) Once a Repayment Agreement has been fulfilled, UCSU may reallocate those savings at their discretion during the budgetary process.
CHAPTER 8-REPORTING
801: Annual Report
(a) The ECRF Board will submit an Annual Report to UCSU detailing Fund activity and projected savings for individual facilities.
Section 2: This bill allocated a one-time transfer of $500,000 from SOR to ECRF, to an account created by SOFO.
Section 3: This bill shall become effective upon final passage of by the Legislative Council and either obtaining the signatures of the two Tri-Executives or the elapse of six days without action by the Tri-Executives.
Vote Count
10/22/09 Passed on 1st reading Acclamation
11/5/09 Amended and passed on 2nd reading Acclamation
__________________ __________________
Blaine Pellicore Daniel Ramos
Legislative Council President Tri-Executive
____________________ __________________
Thomas Higginbotham Christine Thai
Tri-Executive Tri-Executive