Minnesota Legislature
SF 1676
1st Engrossment - 89th Legislature (2015 - 2016) Posted on 09/17/2015 03:51pm
Current Version - 1st Engrossment
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A bill for an act
relating to state government; making changes to state contracting; modifying
grants contracting and the guaranteed energy-savings program; amending
Minnesota Statutes 2014, sections 16B.97, subdivision 1; 16B.98, subdivisions
1, 11; 16C.144.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1.
Minnesota Statutes 2014, section 16B.97, subdivision 1, is amended to read:
Subdivision 1.
Grant agreement.
(a) A grant agreement is a written instrument or
electronic document defining a legal relationship between a granting agency and a grantee
when the principal purpose of the relationship is to transfer cash or something of value
to the recipient to support a public purpose authorized by law instead of acquiring by
professional or technical contract, purchase, lease, or barter property or services for the
direct benefit or use of the granting agency.
(b) This section does not apply to new text begin general obligation grants as defined by section
16A.695 and new text end capital project grants to political subdivisions as defined by section 16A.86.
Sec. 2.
Minnesota Statutes 2014, section 16B.98, subdivision 1, is amended to read:
Subdivision 1.
Limitation.
new text begin (a) new text end As a condition of receiving a grant from
an appropriation of state funds, the recipient of the grant must agree to minimize
administrative costs. The granting agency is responsible for negotiating appropriate limits
to these costs so that the state derives the optimum benefit for grant funding.
new text begin
(b) This section does not apply to general obligation grants as defined by section
16A.695 and also capital project grants to political subdivisions as defined by section
16A.86.
new text end
Sec. 3.
Minnesota Statutes 2014, section 16B.98, subdivision 11, is amended to read:
Subd. 11.
Encumbrance exception.
Notwithstanding subdivision 5, paragraph (a),
clause (2), or section 16C.05, subdivision 2, paragraph (a), clause (3), agencies may
permit a specifically named, legislatively appropriated, noncompetitive grant recipient to
incur eligible expenses based on an agreed upon work plan and budget for up to 60 days
prior to an encumbrance being established in the accounting system. deleted text begin For a grant funded
in whole or in part with state general obligation bond proceeds, an agency may permit
incurring of expenses under this subdivision only with prior approval of the commissioner
of management and budget.
deleted text end
Sec. 4.
Minnesota Statutes 2014, section 16C.144, is amended to read:
16C.144 GUARANTEED ENERGY-SAVINGS PROGRAM.
Subdivision 1.
Definitions.
The following definitions apply to this section.
(a) "Utility" means electricity, natural gas, or other energy resource, water, and
wastewater.
(b) "Utility cost savings" means the difference between the utility costs after
installation of the utility cost-savings measures pursuant to the guaranteed energy-savings
agreement and the baseline utility costs after baseline adjustments have been made.
(c) "Baseline" means the preagreement utilities, operations, and maintenance costs.
(d) "Utility cost-savings measure" means a measure that produces utility cost savings
or operation and maintenance cost savings.
(e) "Operation and maintenance cost savings" means a measurable difference
between operation and maintenance costs after the installation of the utility cost-savings
measures pursuant to the guaranteed energy-savings agreement and the baseline operation
and maintenance costs after inflation adjustments have been made. Operation and
maintenance costs savings shall not include savings from in-house staff labor.
(f) "Guaranteed energy-savings agreement" means an agreement for the installation
of one or more utility cost-savings measures that includes the qualified provider's
guarantee as required under subdivision 2.
(g) "Baseline adjustments" means adjusting the utility cost-savings baselines
annually for changes in the following variables:
(1) utility rates;
(2) number of days in the utility billing cycle;
(3) square footage of the facility;
(4) operational schedule of the facility;
(5) facility temperature set points;
(6) weather; and
(7) amount of equipment or lighting utilized in the facility.
(h) "Inflation adjustment" means adjusting the operation and maintenance
cost-savings baseline annually for inflation.
(i) "deleted text begin Lease purchase agreementdeleted text end new text begin Project financingnew text end " means deleted text begin an agreementdeleted text end new text begin any type of
financing including but not limited to lease, lease purchase, installment agreements, or
bonds issued by an entity, other than the state, with authority to issue bonds,new text end obligating the
state to make regular deleted text begin leasedeleted text end payments to satisfy the deleted text begin leasedeleted text end costs of the utility cost-savings
measures until the final paymentdeleted text begin , after which time the utility cost-savings measures
become the sole property of the state of Minnesotadeleted text end .
(j) "Qualified provider" means a person or business experienced in the design,
implementation, and installation of utility cost-savings measures.
(k) "Engineering report" means a report prepared by a professional engineer licensed
by the state of Minnesota summarizing estimates of all costs of installations, modifications,
or remodeling, including costs of design, engineering, installation, maintenance, repairs,
and estimates of the amounts by which utility and operation and maintenance costs will be
reduced.
(l) "Capital cost avoidance" means money expended by a state agency to pay for
utility cost-savings measures with a guaranteed savings agreement so long as the measures
that are being implemented to achieve the utility, operation, and maintenance cost savings
are a significant portion of an overall project as determined by the commissioner.
(m) "Guaranteed energy-savings program guidelines" means policies, procedures,
and requirements of guaranteed savings agreements established by the Department of
Administration.
Subd. 2.
Guaranteed energy-savings agreement.
The commissioner may enter
into a guaranteed energy-savings agreement with a qualified provider if:
(1) the qualified provider is selected through a competitive process in accordance
with the guaranteed energy-savings program guidelines within the Department of
Administration;
(2) the qualified provider agrees to submit an engineering report prior to the
execution of the guaranteed energy-savings agreement. The cost of the engineering report
may be considered as part of the implementation costs if the commissioner enters into a
guaranteed energy-savings agreement with the provider;
(3) the term of the guaranteed energy-savings agreement shall not exceed 25 years
from the date of final installation;
(4) the commissioner finds that the amount deleted text begin itdeleted text end new text begin the state new text end would spendnew text begin , less the amount
contributed for capital cost avoidance,new text end on the utility cost-savings measures recommended
in the engineering report will not exceed the amount to be saved in utility operation and
maintenance costs over 25 years from the date of implementation of utility cost-savings
measures;
(5) the qualified provider provides a written guarantee that the annual utility,
operation, and maintenance cost savings during the term of the guaranteed energy-savings
agreement will meet or exceed the annual payments due under deleted text begin a lease purchase agreementdeleted text end new text begin
the project financingnew text end . The qualified provider shall reimburse the state for any shortfall of
guaranteed utility, operation, and maintenance cost savings; and
(6) the qualified provider gives a sufficient bond in accordance with section
574.26 to the commissioner for the faithful implementation and installation of the utility
cost-savings measures.
Subd. 3.
deleted text begin Lease purchase agreementdeleted text end new text begin Project financingnew text end .
The commissioner
may enter into deleted text begin a lease purchase agreementdeleted text end new text begin project financingnew text end with any party for the
implementation of utility cost-savings measures in accordance with the guaranteed
energy-savings agreement. deleted text begin The implementation costs of the utility cost-savings measures
recommended in the engineering report shall not exceed the amount to be saved in utility
and operation and maintenance costs over the term of the lease purchase agreement.deleted text end The
term of the deleted text begin lease purchase agreementdeleted text end new text begin project financingnew text end shall not exceed 25 years from
the date of final installation. The deleted text begin leasedeleted text end new text begin project financingnew text end is assignable in accordance with
terms approved by the commissioner of management and budget.
Subd. 4.
Use of capital cost avoidance.
The affected state agency may contribute
funds for capital cost avoidance for guaranteed energy-savings agreements. Use of capital
cost avoidance is subject to the guaranteed energy-savings program guidelines within the
Department of Administration.
Subd. 5.
Independent report.
For each guaranteed energy-savings agreement
entered into, the commissioner of administration shall contract with an independent third
party to evaluate the cost-effectiveness of each utility cost-savings measure implemented
to ensure that such measures were the least-cost measures available. For the purposes of
this section, "independent third party" means an entity not affiliated with the qualified
provider, that is not involved in creating or providing conservation project services to that
provider, and that has expertise (or access to expertise) in energy-savings practices.