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A bill to be entitled

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An act relating to state contracts; amending s.

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287.063, F.S.; prohibiting the term of payment for

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consolidated equipment finance contracts from extending

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beyond the anticipated useful life of the equipment

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financed; deleting the requirement that the Chief

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Financial Officer establish criteria prohibiting a

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state agency from obligating an annualized amount of

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payments for certain deferred payment purchases;

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amending s. 287.064, F.S.; extending the period allowed

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for the repayment of funds for certain purchases

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relating to energy conservation measures; requiring

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that guaranteed energy performance savings contractors

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provide for the replacement or the extension of the

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useful life of the equipment during the term of a

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contract; amending s. 489.145, F.S.; revising

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provisions relating to guaranteed energy performance

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savings contracting to include energy consumption and

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energy-related operational savings; revising provisions

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for the financing of guaranteed energy performance

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savings contracts; revising criteria for proposed

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contracts; revising program administration and contract

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review provisions; requiring that consolidated

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financing of deferred payment commodity contracts be

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secured by certain funds; prohibiting the Chief

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Financial Officer from approving certain contracts;

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providing an effective date.

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Be It Enacted by the Legislature of the State of Florida:

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     Section 1.  Paragraph (b) of subsection (2) and subsection

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(5) of section 287.063, Florida Statutes, are amended to read:

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     287.063  Deferred-payment commodity contracts; preaudit

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review.--

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     (2)

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     (b)  The Chief Financial Officer shall establish, by rule,

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criteria for approving purchases made under deferred-payment

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contracts which require the payment of interest. Criteria shall

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include, but not be limited to, the following provisions:

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     1.  No contract shall be approved in which interest exceeds

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the statutory ceiling contained in this section. However, the

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interest component of any master equipment financing agreement

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entered into for the purpose of consolidated financing of a

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deferred-payment, installment sale, or lease-purchase shall be

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deemed to comply with the interest rate limitation of this

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section so long as the interest component of every interagency

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agreement under such master equipment financing agreement

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complies with the interest rate limitation of this section.

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     2.  No deferred-payment purchase for less than $30,000 shall

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be approved, unless it can be satisfactorily demonstrated and

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documented to the Chief Financial Officer that failure to make

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such deferred-payment purchase would adversely affect an agency

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in the performance of its duties. However, the Chief Financial

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Officer may approve any deferred-payment purchase if the Chief

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Financial Officer determines that such purchase is economically

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beneficial to the state.

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     3. No agency shall obligate an annualized amount of

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payments for deferred-payment purchases in excess of current

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operating capital outlay appropriations, unless specifically

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authorized by law or unless it can be satisfactorily demonstrated

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and documented to the Chief Financial Officer that failure to

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make such deferred-payment purchase would adversely affect an

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agency in the performance of its duties.

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     3.4. No contract shall be approved which extends payment

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beyond 5 years, unless it can be satisfactorily demonstrated and

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documented to the Chief Financial Officer that failure to make

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such deferred-payment purchase would adversely affect an agency

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in the performance of its duties. The payment term may not exceed

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the useful life of the equipment unless the contract provides for

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the replacement or the extension of the useful life of the

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equipment during the term of the loan.

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     (5) For purposes of this section, the annualized amount of

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any such deferred payment commodity contract must be supported

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from available recurring funds appropriated to the agency in an

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appropriation category, other than the expense appropriation

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category as defined in chapter 216, which that the Chief

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Financial Officer has determined is appropriate or which that the

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Legislature has designated for payment of the obligation incurred

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under this section.

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     Section 2.  Subsections (10) and (11) of section 287.064,

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Florida Statutes, are amended to read:

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     287.064  Consolidated financing of deferred-payment

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purchases.--

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     (10)  Costs incurred pursuant to a guaranteed energy

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performance savings contract, including the cost of energy

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conservation measures, each as defined in s. 489.145, may be

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financed pursuant to a master equipment financing agreement;

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however, the costs of training, operation, and maintenance may

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not be financed. The period of time for repayment of the funds

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drawn pursuant to the master equipment financing agreement under

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this subsection may exceed 5 years but may not exceed 20 10 years

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for energy conservation measures pursuant to s. 489.145,

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excluding the costs of training, operation, and maintenance. The

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guaranteed energy performance savings contractor shall provide

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for the replacement or the extension of the useful life of the

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equipment during the term of the contract.

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     (11)  For purposes of consolidated financing of deferred

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payment commodity contracts under this section by a state agency,

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the annualized amount of any such contract must be supported from

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available recurring funds appropriated to the agency in an

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appropriation category, other than the expense appropriation

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category as defined in chapter 216, which that the Chief

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Financial Officer has determined is appropriate or which that the

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Legislature has designated for payment of the obligation incurred

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under this section.

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     Section 3.  Section 489.145, Florida Statutes, is amended to

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read:

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     489.145  Guaranteed energy performance savings

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contracting.--

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     (1)  SHORT TITLE.--This section may be cited as the

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"Guaranteed Energy Performance Savings Contracting Act."

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     (2)  LEGISLATIVE FINDINGS.--The Legislature finds that

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investment in energy conservation measures in agency facilities

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can reduce the amount of energy consumed and produce immediate

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and long-term savings. It is the policy of this state to

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encourage agencies to invest in energy conservation measures that

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reduce energy consumption, produce a cost savings for the agency,

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and improve the quality of indoor air in public facilities and to

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operate, maintain, and, when economically feasible, build or

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renovate existing agency facilities in such a manner as to

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minimize energy consumption and maximize energy savings. It is

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further the policy of this state to encourage agencies to

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reinvest any energy savings resulting from energy conservation

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measures in additional energy conservation efforts.

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     (3)  DEFINITIONS.--As used in this section, the term:

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     (a)  "Agency" means the state, a municipality, or a

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political subdivision.

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     (b) "Energy conservation measure" means a training program,

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facility alteration, or equipment purchase to be used in new

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construction, including an addition to an existing facility,

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which reduces energy or energy-related operating costs and

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includes, but is not limited to:

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     1.  Insulation of the facility structure and systems within

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the facility.

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     2.  Storm windows and doors, caulking or weatherstripping,

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multiglazed windows and doors, heat-absorbing, or heat-

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reflective, glazed and coated window and door systems, additional

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glazing, reductions in glass area, and other window and door

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system modifications that reduce energy consumption.

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     3.  Automatic energy control systems.

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     4.  Heating, ventilating, or air-conditioning system

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modifications or replacements.

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     5.  Replacement or modifications of lighting fixtures to

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increase the energy efficiency of the lighting system, which, at

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a minimum, must conform to the applicable state or local building

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code.

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     6.  Energy recovery systems.

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     7.  Cogeneration systems that produce steam or forms of

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energy such as heat, as well as electricity, for use primarily

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within a facility or complex of facilities.

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     8. Energy conservation measures that reduce Btu, kW, or kWh

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consumed or provide long-term operating cost reductions or

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significantly reduce Btu consumed.

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     9.  Renewable energy systems, such as solar, biomass, or

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wind systems.

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     10.  Devices that reduce water consumption or sewer charges.

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     11.  Storage systems, such as fuel cells and thermal

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storage.

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     12.  Generating technologies, such as microturbines.

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     13.  Any other repair, replacement, or upgrade of existing

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equipment.

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     (c)  "Energy cost savings" means a measured reduction in the

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cost of fuel, energy consumption, and stipulated operation and

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maintenance created from the implementation of one or more energy

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conservation measures when compared with an established baseline

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for the previous cost of fuel, energy consumption, and stipulated

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operation and maintenance.

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     (d)  "Guaranteed energy performance savings contract" means

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a contract for the evaluation, recommendation, and implementation

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of energy conservation measures or energy-related operational

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saving measures, which, at a minimum, shall include:

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     1.  The design and installation of equipment to implement

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one or more of such measures and, if applicable, operation and

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maintenance of such measures.

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     2.  The amount of any actual annual savings that meet or

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exceed total annual contract payments made by the agency for the

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contract.

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     3.  The finance charges incurred by the agency over the life

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of the contract and may include allowable cost-avoidance. As used

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in this section, allowable cost-avoidance calculations include,

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but are not limited to, avoided provable budgeted costs contained

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in a capital replacement plan less the current undepreciated

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value of replaced equipment and the replacement cost of the new

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equipment.

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     (e)  "Guaranteed energy performance savings contractor"

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means a person or business that is licensed under chapter 471,

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chapter 481, or this chapter, and is experienced in the analysis,

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design, implementation, or installation of energy conservation

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measures through energy performance contracts.

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     (4)  PROCEDURES.--

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     (a)  An agency may enter into a guaranteed energy

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performance savings contract with a guaranteed energy performance

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savings contractor to significantly reduce energy consumption or

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energy-related operating costs of an agency facility through one

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or more energy conservation measures.

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     (b)  Before design and installation of energy conservation

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measures, the agency must obtain from a guaranteed energy

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performance savings contractor a report that summarizes the costs

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associated with the energy conservation measures or energy-

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related operational cost-saving measures and provides an estimate

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of the amount of the energy cost savings. The agency and the

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guaranteed energy performance savings contractor may enter into a

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separate agreement to pay for costs associated with the

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preparation and delivery of the report; however, payment to the

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contractor shall be contingent upon the report's projection of

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energy or operational cost savings being equal to or greater than

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the total projected costs of the design and installation of the

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report's energy conservation measures.

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     (c)  The agency may enter into a guaranteed energy

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performance savings contract with a guaranteed energy performance

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savings contractor if the agency finds that the amount the agency

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would spend on the energy conservation or energy-related cost-

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saving measures will not likely exceed the amount of the energy

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or energy-related cost savings for up to 20 years from the date

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of installation, based on the life cycle cost calculations

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provided in s. 255.255, if the recommendations in the report were

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followed and if the qualified provider or providers give a

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written guarantee that the energy or energy-related cost savings

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will meet or exceed the costs of the system. However, actual

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computed cost savings must meet or exceed the estimated cost

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savings provided in program approval. Baseline adjustments used

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in calculations must be specified in the contract. The contract

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may provide for installment payments for a period not to exceed

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20 years.

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     (d)  A guaranteed energy performance savings contractor must

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be selected in compliance with s. 287.055; except that if fewer

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than three firms are qualified to perform the required services,

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the requirement for agency selection of three firms, as provided

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in s. 287.055(4)(b), and the bid requirements of s. 287.057 do

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not apply.

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     (e)  Before entering into a guaranteed energy performance

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savings contract, an agency must provide published notice of the

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meeting in which it proposes to award the contract, the names of

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the parties to the proposed contract, and the contract's purpose.

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     (f)  A guaranteed energy performance savings contract may

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provide for financing, including tax-exempt financing, by a third

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party. The contract for third party financing may be separate

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from the energy performance contract. A separate contract for

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third party financing must include a provision that the third

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party financier must not be granted rights or privileges that

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exceed the rights and privileges available to the guaranteed

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energy performance savings contractor.

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     (g) Financing for guaranteed energy performance savings

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contracts may be provided under the authority of s. 287.064.

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     (h) The Office of the Chief Financial Officer shall review

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proposals to ensure that the most effective financing is being

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used.

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     (i)(g) In determining the amount the agency will finance to

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acquire the energy conservation measures, the agency may reduce

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such amount by the application of any grant moneys, rebates, or

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capital funding available to the agency for the purpose of buying

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down the cost of the guaranteed energy performance savings

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contract. However, in calculating the life cycle cost as required

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in paragraph (c), the agency shall not apply any grants, rebates,

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or capital funding.

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     (5)  CONTRACT PROVISIONS.--

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     (a)  A guaranteed energy performance savings contract must

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include a written guarantee that may include, but is not limited

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to the form of, a letter of credit, insurance policy, or

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corporate guarantee by the guaranteed energy performance savings

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contractor that annual energy cost savings will meet or exceed

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the amortized cost of energy conservation measures.

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     (b)  The guaranteed energy performance savings contract must

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provide that all payments, except obligations on termination of

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the contract before its expiration, may be made over time, but

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not to exceed 20 years from the date of complete installation and

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acceptance by the agency, and that the annual savings are

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guaranteed to the extent necessary to make annual payments to

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satisfy the guaranteed energy performance savings contract.

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     (c)  The guaranteed energy performance savings contract must

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require that the guaranteed energy performance savings contractor

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to whom the contract is awarded provide a 100-percent public

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construction bond to the agency for its faithful performance, as

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required by s. 255.05.

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     (d)  The guaranteed energy performance savings contract may

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contain a provision allocating to the parties to the contract any

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annual energy cost savings that exceed the amount of the energy

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cost savings guaranteed in the contract.

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     (e)  The guaranteed energy performance savings contract

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shall require the guaranteed energy performance savings

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contractor to provide to the agency an annual reconciliation of

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the guaranteed energy or energy-related cost savings. If the

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reconciliation reveals a shortfall in annual energy or energy-

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related cost savings, the guaranteed energy performance savings

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contractor is liable for such shortfall. If the reconciliation

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reveals an excess in annual energy cost savings, the excess

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savings may be allocated under paragraph (d) but may not be used

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to cover potential energy cost savings shortages in subsequent

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contract years.

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     (f)  The guaranteed energy performance savings contract must

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provide for payments of not less than one-twentieth of the price

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to be paid within 2 years from the date of the complete

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installation and acceptance by the agency using straight-line

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amortization for the term of the loan, and the remaining costs to

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be paid at least quarterly, not to exceed a 20-year term, based

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on life cycle cost calculations.

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     (g)  The guaranteed energy performance savings contract may

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extend beyond the fiscal year in which it becomes effective;

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however, the term of any contract expires at the end of each

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fiscal year and may be automatically renewed annually for up to

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20 years, subject to the agency making sufficient annual

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appropriations based upon continued realized energy savings.

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     (h)  The guaranteed energy performance savings contract must

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stipulate that it does not constitute a debt, liability, or

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obligation of the state.

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     (6)  PROGRAM ADMINISTRATION AND CONTRACT REVIEW.--The

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Department of Management Services, with the assistance of the

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Office of the Chief Financial Officer, shall may, within

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available resources, provide technical content assistance to

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state agencies contracting for energy conservation measures and

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engage in other activities considered appropriate by the

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department for promoting and facilitating guaranteed energy

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performance contracting by state agencies. The Office of the

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Chief Financial Officer, with the assistance of the Department of

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Management Services, shall may, within available resources,

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develop model contractual and related documents for use by state

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agencies. Prior to entering into a guaranteed energy performance

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savings contract, any contract or lease for third-party

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financing, or any combination of such contracts, a state agency

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shall submit such proposed contract or lease to the Office of the

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Chief Financial Officer for review and approval. A proposed

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contract or lease shall include:

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     (a) Supporting information required by s. 216.023(4)(a)9.

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     (b) Documentation supporting recurring funds requirements

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in ss. 287.063(5) and 287.064(11).

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     (c) Approval by the agency head or his or her designee.

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     (d) An agency measurement and verification plan to monitor

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cost savings.

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     (7) FUNDING SUPPORT.--For purposes of consolidated

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financing of deferred payment commodity contracts under this

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section by a state agency, any such contract must be supported

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from available recurring funds appropriated to the agency in an

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appropriation category, as defined in chapter 216, which the

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Chief Financial Officer has determined is appropriate or which

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the Legislature has designated for payment of the obligation

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incurred under this section.

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The Office of the Chief Financial Officer may not approve any

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contract submitted under this section which does not meet the

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requirements of this section.

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     Section 4.  This act shall take effect July 1, 2008.