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Energy Conservation Projects Cut School Operating Costs

The Douglas County School District announced that it will move forward with a district-wide series of energy services projects designed to save money in energy and maintenance costs and take advantage of limited funding options available. The projects were chosen following a Financial Grade Audit of the District's schools and administrative buildings implemented in February 2008 by Ameresco, Inc., an energy services company regionally based in Nevada.

Based on the findings of the audit, the District signed a Performance Contract with Ameresco for $5,095,000 in June 2008. The audit identified several energy conservation measures which, once implemented, will save the District more than $450,000 annually. These savings are guaranteed by Ameresco and will fund the project through debt service, which means the energy services project will pay for itself through the savings it achieves.

A Performance Contract is an alternative way to fund major capital projects and still remain budget neutral. It generates savings in utility costs by bundling together several energy conservation measures that help pay for each other despite the varying paybacks of the individual energy conservation measures.

Nevada's law governing performance contracting (NRS 332) requires all costs of a Performance Contract (including design, construction management, and even the required third party consultant) to be paid by the energy savings, with a maximum project length of 15 years. Projects under a performance contract must be energy and infrastructure in nature, not health and safety projects.

The District considered a Performance Contract because of the decrease in the District's capital funds over the last two years. In order to fund a number of necessary capital projects, including health and safety projects identified by the Keep Improving Douglas Schools citizens committee, the District is seeking approval of a $395 million bond on the November 4th ballot. If the Bond is not approved, the Douglas County School District's capital funds will drop to $0 by June 2011.

In looking for alternate methods to fund projects, the District found it could use a Performance Contract to generate savings that pay for the project with no up-front costs and a minimum guaranteed outcome. The process has a guaranteed maximum project cost with no change orders and a concise construction schedule.

The federal government has completed more than $4 billion in Performance Contract projects and has just approved spending $50 billion more over the next ten years. In Nevada, Washoe County School District has completed six phases of work with Ameresco amounting to approximately $18 million in completed projects. In addition, the City of Henderson, Arizona Department of Corrections, Washoe County, Pershing General Hospital, and, UNLV are all in progress or have completed projects utilizing a Performance Contract.

The District is using a Performance Contract in addition to the Bond request because the magnitude of the District's needs exceeds a one avenue approach. Also, a Performance Contract complements the bond by performing much-needed infrastructure improvements while requiring no up-front funding.

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