Yesterday, the Governor signed into law Senate Bill 73 (SB 73), which implements Proposition 39 (Prop. 39). Prop. 39 was approved by voters last year to provide California school districts, county offices of education, charter schools and state special schools with approximately $381 million in fiscal year 2013-14 for energy efficiency and renewable energy projects. Prop. 39 will provide schools with funds generated from the closure of an out-of-state businesses tax loophole for five fiscal years, starting immediately.
Because the Prop. 39 bill contains language that makes its provisions effective immediately, the School Energy Coalition (SEC) is seeking school districts and county offices of education to assist SEC in working with the California Energy Commission and the Department of Education to develop implementation guidelines. SEC has also developed a list of estimated amounts for which districts may be eligible to receive under Prop. 39. The list can be accessed here.
Fortunately, given the immediate effectiveness of SB 73, schools have a great deal of flexibility in contracting for projects that generate energy cost savings under an alternative procurement structure set forth in California Government Code section 4217.10 et seq. Schools can enter into performance contracts, design-build, lease-leaseback and power purchase agreements pursuant to the Government Code provisions. However, schools utilizing this alternative procurement to build their energy efficiency or renewable energy projects should be cautious about complying strictly with the notice and finding requirements of the law. Schools should also ensure compliance with all other applicable bonding, prevailing wage and public contract requirements. Finally, as ongoing performance of energy efficiency and renewable energy projects is always of utmost concern, schools should carefully evaluate performance guarantees, ensuring that such guarantees meet industry standards, as well as review any waivers or limitations of liability requested by their contractors to ensure that the schools’ ongoing performance rights, and energy cost savings, are protected.