Establishing a Green Lights Revolving Fund in Houston.
The City of Houston, Texas “Houston” redirects here. For other uses, see Houston (disambiguation).
Houston (pronounced /'hjuːstən/) is the largest city in the state of Texas and the , has established a revolving fund revolving fund
A fund established for a certain purpose, such as making loans, with the stipulation that repayments to the fund may be used anew for the same purpose.
Noun 1. to support selected departmental energy improvement projects whose energy savings will repay the initial project costs plus a fund-administration fee within 24 months.
This article consists of excerpts from the report Establishing a Green Lights Revolving Fund, published by Public Technology, Inc.'s Urban Consortium Energy Task Force, and is used with permission.
The City of Houston, Texas, owns and operates more than 1,100 facilities with a combined size in excess of nine million square feet. They vary in use - ranging from unmanned pump and lift stations to office buildings, airports, and convention centers - and are operated by 11 departments. To operate these city facilities, Houston incurs annual energy costs of $70 million for electricity and $4 million for natural gas.
Efforts to optimize optimize - optimisation the energy efficiency of all of the city's facilities began with the Federal Emergency Temperature Building Plan of 1978. The federal plan was allowed to be modified for the Houston region because of the climate and was named the Houston Emergency Temperature Building Restriction Plan. The City of Houston Office of Energy Conservation was created in order to enforce the plan citywide. After the ordinance A law, statute, or regulation enacted by a Municipal Corporation.
An ordinance is a law passed by a municipal government. A municipality, such as a city, town, village, or borough, is a political subdivision of a state within which a municipal corporation has been was rescinded in 1982, office staffing was reduced, and the office was charged with monitoring and assisting operating departments in optimizing facility energy consumption.
The Green Lights Program
The most recent effort to optimize energy usage in facilities on a citywide basis is the City of Houston's commitment in the U.S. Environmental Protection Agency's (EPA EPA eicosapentaenoic acid.
n.pr See acid, eicosapentaenoic.
n. ) Green Lights Program. In 1992, Houston was the first large urban government to sign the memorandum of understanding A Memorandum of Understanding (MoU) is a legal document describing a bilateral or multilateral agreement between parties. It expresses a convergence of will between the parties, indicating an intended common line of action and may not imply a legal commitment. (MOU (Minutes Of Usage) A metric used to compute billing and/or statistics for telephone calls or other network use. ) with the EPA. As part of the MOU, the City of Houston agreed to review the lighting efficiency in all of its facilities over the next five years and to implement those lighting upgrades which are cost effective and environmentally beneficial.
The City of Houston expanded the EPA Green Lights Program by executive order of the mayor to include not only lighting but all major energy consuming equipment and factors in the city's facilities. Houston's Green Lights Program allows the departments operating facilities several options for conducting facility energy audits and for financing cost-effective energy improvements identified through these energy audits. As the facility-operating departments proceeded with the Green Lights Program, the single most important obstacle to widespread adoption of energy-efficient, cost-effective improvements was the question, "Where does the department get the funds to buy the equipment to make the improvements?"
The Green Lights Revolving Fund project was designed to provide an attractive answer to that question: an internal source of recurring re·cur
intr.v. re·curred, re·cur·ring, re·curs
1. To happen, come up, or show up again or repeatedly.
2. To return to one's attention or memory.
3. To return in thought or discourse. monies to be devoted to energy improvements. The proposal to create a revolving fund for energy improvements had its roots in previous city experiences with private-sector performance contracting.
In 1987, the City of Houston library department entered into an energy-savings performance contract. This was one of the first energy performance contracts entered into in the State of Texas in which all of the capital costs were to be paid by the contractor and recouped through savings. The installation of energy management systems, lighting retrofits, and building envelope A building envelope is the separation between the interior and the exterior environments of a building. It serves as the outer shell to protect the indoor environment as well as to facilitate its climate control. renovations and modifications were made and resulted in significant reductions in electric and natural gas utility costs in the range of 20 percent to 40 percent. The annual cost of electricity and natural gas was approximately $1.3 million in 1987. With savings guarantees from the energy-service contractor, the annual energy cost for the library department essentially would be frozen for the five-year period for the contract. In addition to the energy-efficiency and building improvements, the library department also received a full repair and replacement maintenance contract on two large facilities located in the central complex and preventive maintenance The routine checking of hardware that is performed by a field engineer on a regularly scheduled basis. See remedial maintenance.
preventive maintenance - (PM) To bring down a machine for inspection or test purposes.
See provocative maintenance, scratch monkey. in all of its 36 branch libraries.
In 1993, as part of Houston's Green Lights Program, the library department renegotiated an energy performance contract with a similar scope of work as the first contract except for additional capital mechanical equipment, updated lighting, and additional maintenance services. The contractor was required to renovate, retrofit ret·ro·fit
v. ret·ro·fit·ted or ret·ro·fit, ret·ro·fit·ting, ret·ro·fits
1. To provide (a jet, automobile, computer, or factory, for example) with parts, devices, or equipment not in , and modify the city facilities to improve energy efficiency and reduce energy consumption. The energy conservation measures the contractor included were replacing inefficient water chillers A water chiller is a device used in hydroponics to cool the water temperature in the reservoir. In hydroponic application, pumps, lights and ambient heat can warm the reservoir temperatures, leading to plant root and health problems. ; changing a constant-volume air conditioning air conditioning, mechanical process for controlling the humidity, temperature, cleanliness, and circulation of air in buildings and rooms. Indoor air is conditioned and regulated to maintain the temperature-humidity ratio that is most comfortable and healthful. system to variable-volume; replacing existing motors with energy-efficient motors; cleaning the lenses of fluorescent lamp fluorescent lamp
Type of electric discharge lamp consisting of a glass tube filled with a mixture of argon and mercury vapor. A current of electricity causes the vapor to produce ultraviolet radiation that, in turn, excites a phosphor coating on the inside of the tube, fixtures; removing lamps where not required; and installing an energy-management system for the control of the air conditioning, lighting, and other miscellaneous measures included in the contract. This was a large project with several million dollars invested up front by the contractor, who will reap a good profit from the project.
An alternative method of funding the project internally was explored - through a revolving fund that would reduce the cost to the facility-operating department while allowing the principal and interest from the capital invested to replenish re·plen·ish
v. re·plen·ished, re·plen·ish·ing, re·plen·ish·es
1. To fill or make complete again; add a new stock or supply to: replenish the larder.
2. the revolving fund. Similar private-sector energy performance contracts in other jurisdictions (e.g., Austin, St. Louis County St. Louis County is the name of multiple counties in the United States:
Establishing the Revolving Fund
Based on previous experiences with private-sector performance contracting (both in Houston and elsewhere), Houston's commitment to the EPA Green Lights Program for its 1,100 facilities, and the need to find funding for cost-effective energy improvements, Houston officials decided to establish a Green Lights Revolving Fund. The revolving fund would consist of an internal, dedicated, self-replenishing funding source based on a performance-contract approach for city energy improvements identified through the Green Lights audits.
The city applied for Public Technology, Inc., Urban Consortium Energy Task Force (UCETF UCETF Urban Consortium Energy Task Force ) grant funds as seed money to establish the revolving fund. City officials supplemented the $20,000 grant by locating other funding sources, as noted in subsequent sections of this article.
During the lengthy process of establishing the revolving fund, energy management staff were able to use the grant funds' acceptance as the justification for establishing the Green Lights Revolving Fund in spite of in opposition to all efforts of; in defiance or contempt of; notwithstanding.
See also: Spite opposition from some city groups to the establishment of a dedicated, revolving fund for energy improvements and concerns as to the adequacy of the initial funding.
One of the first steps taken by city staff once the grant funding was approved was to identify all the key stakeholders Stakeholders
All parties that have an interest, financial or otherwise, in a firm-stockholders, creditors, bondholders, employees, customers, management, the community, and the government. associated with creation of an internal, dedicated revolving fund. These groups included the budget office, the finance director, the controller's office, the legal department, and the facility-operating departments. With support from the facility-operating departments and the finance director, the energy management staff became the champion of creating the revolving fund and taking the multitude of steps needed to establish such a fund. The concept and steps needed to complete the task were discussed with the various stakeholders, and their review and approval of the steps were obtained. The comptroller's office identified and approved the steps to create the revolving fund.
In the City of Houston's fund accounting systems, a special revenue fund was required to enable carryover carryover n. in taxation accounting, using a tax year's deductions, business losses or credits to apply to the following year's tax return to reduce the tax liability. (See: carryback) of revenues and expenditures from one fiscal year to another, which is a critical element in order to make effective use of performance contracting repayments (energy savings) to replenish the revolving fund over time. If the Green Lights Revolving Fund needed to be reauthorized each year and was limited to only those improvements that would be repaid in one year, the types of energy improvements that could be funded through this device would be severely limited.
Unfortunately, the energy staff did not contact all the appropriate city stakeholders early enough in the fund establishment process, and some of the stakeholders changed personnel or did not address the revolving fund issues due to the small amount of seed funding Seed funding is investing capital to begin a new project, so that it has enough funds to sustain itself for a period of development until it reaches either a state where it is able to continue funding itself, or has created something in value so that it is worthy of future rounds . As a result of these problems, the creation of the revolving fund became a repetitive and lengthy process. A particular problem associated with poor communications was that the transfer of the funds from the grant fund to the revolving fund was not included in the city's annual budget and appropriations ordinances. Because not all the affected parties in the budget office and the legal department were aware of the efforts to create the revolving fund, the transfer between the grant and special revenue fund had to be revised several times before it was finally approved.
Additional Funding Sources
The initial seed funds for the Green Lights Revolving Fund were from salary reimbursement Reimbursement
Payment made to someone for out-of-pocket expenses has incurred. from the UCETF grant. The grant funds were then transferred to the revolving fund. Because of the limited amount of grant funds made available, coupled with the time required to perform the project tasks and obtain grant reimbursement and funds transfer before the revolving fund could be established, it was decided to explore additional initial funding options for the Green Lights Revolving Fund.
One source of additional funding was achieved through utility rebates to the city from the local electric utility. Its commercial efficiency improvement program, offered to all customer electrical loads If an electric circuit has a well-defined output terminal, the circuit connected to this terminal (or its input impedance) is the load. (The term 'load' may also refer to the power consumed by a circuit; that topic is not discussed here. served under the two commercial rate tariffs This is a list of tariffs and trade legislation:
Proper ventilation requires also that there be a movement or circulation of the air within the space and that the temperature and , and air-conditioning (HVAC (Heating Ventilation Air Conditioning) In the home or small office with a handful of computers, HVAC is more for human comfort than the machines. In large datacenters, a humidity-free room with a steady, cool temperature is essential for the trouble-free ) upgrades; and structural improvements. Because of the relatively small amount of rebates available to city operating departments, to prevent unnecessary competition among facility-operating departments, and to provide additional seed monies for the Green Lights Revolving Fund, the city's office of energy management was designated the clearinghouse for all rebate rebate, partial refund of the total price paid for goods or services. In the United States, rebates were historically given by railroads to favored shippers as a return on transportation charges. applications and receiver of all funds from the rebate program. This was accomplished through a rebate policy, which states:
* all rebates will be applied for through the office of energy management;
* if more than $100,000 in rebates are requested in any given year, the office of energy management will determine which applications for rebates are to be submitted;
* all rebates will be shared on a 40 percent to the initiating department and 60 percent to the Green Lights Revolving Fund basis; and
* the rebate share allotted al·lot
tr.v. al·lot·ted, al·lot·ting, al·lots
1. To parcel out; distribute or apportion: allotting land to homesteaders; allot blame.
2. to the revolving fund will be used to fund additional energy improvements on a competitive basis among facility-operating departments.
The electric utility rebates to the City of Houston in the first year totaled $60,769 through lighting and HVAC improvements from the civic center and library department. Using the rebate sharing allocation The apportionment or designation of an item for a specific purpose or to a particular place.
In the law of trusts, the allocation of cash dividends earned by a stock that makes up the principal of a trust for a beneficiary usually means that the dividends will be treated as procedure, the Green Lights Revolving Fund received $36,461 from these rebates, with the two initiating departments receiving $24,308. As a result of these additional funds, the seed funds available in the revolving fund totaled $55,707.95 for the initial round of energy projects to be funded.
An additional funding source identified as potential money for a dedicated revolving fund for energy improvements is associated with private-sector energy [TABULAR tab·u·lar
1. Having a plane surface; flat.
2. Organized as a table or list.
3. Calculated by means of a table.
resembling a table. DATA FOR EXHIBIT 1 OMITTED] performance contracts. In these agreements, the contractor generally guarantees only 85 percent of its projected savings as a conservative business practice. The actual energy savings, however, are typically 98 percent of the projected savings and oftentimes of·ten·times also oft·times
Adv. 1. oftentimes - many times at short intervals; "we often met over a cup of coffee"
frequently, oft, often, ofttimes are more than 100 percent of projected savings. The result is that while the budgeted energy costs are frozen at baseline costs The continuing annual costs of military operations funded by the operations and maintenance and military personnel appropriations. for the duration of the contracts (typically five to 10 years), in actuality ac·tu·al·i·ty
n. pl. ac·tu·al·i·ties
1. The state or fact of being actual; reality. See Synonyms at existence.
2. Actual conditions or facts. Often used in the plural. the portion of the nonguaranteed savings that occurs (between 85 percent and 100 percent of projected savings) is available to the facility-operating department for additional energy improvements or other purposes. Since oftentimes the actual savings exceed the projected savings (greater than 100 percent), it was decided to use these excess savings to fund other energy improvements citywide. An interdepartmental in·ter·de·part·men·tal
Involving or representing different departments, as of a business, an academic institution, or a government: "the petty interdepartmental squabbling that surrounds the making of . . . memorandum of agreement A memorandum of agreement (MOA) or cooperative agreement is a document written between parties to cooperatively work together on an agreed upon project or meet an agreed upon objective. The purpose of an MOA is to have a written understanding of the agreement between parties. allows all performance contract excess savings to be deposited in the Green Lights Revolving Fund.
Additional funding for the revolving fund will come from the interest from the original seed funding from the initial energy conservation projects that will be funded.
Before the initial project solicitation solicitation
In criminal law, the act of asking, inducing, or directing someone to commit a crime. The person soliciting another becomes an accomplice to the crime. The term also refers to the act of obtaining bribes, as well as to the crime of a prostitute who offers sexual process for the Green Lights Revolving Fund, it was critical to develop a written guide of what requirements would be needed for the revolving fund to be effective and how it would work. The various roles and responsibilities of the stakeholders needed to be defined in written, binding agreements.
Binding agreements were developed for use between the facility-operating department(s) and the office of energy management for the Green Lights Revolving Fund. The purpose of this memorandum of understanding (MOU) is to establish a multiyear agreement for funding viable energy conservation projects from the revolving fund and to guarantee a mechanism for replenishing the fund from avoided energy cost. The MOU freezes the facility's budgeted energy costs for the duration of the agreement and specifies that the repayment will continue from energy savings until project costs and fund administrative costs administrative costs,
n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. are recovered.
The office of energy management has responsibility for administering the Green Lights Revolving Fund, determining which projects to fund, establishing the base year for funded facilities to be upgraded, monitoring and verifying ver·i·fy
tr.v. ver·i·fied, ver·i·fy·ing, ver·i·fies
1. To prove the truth of by presentation of evidence or testimony; substantiate.
2. energy savings from any and all energy conservation measures funded, maintaining current financial records on audit and installation costs, and continually con·tin·u·al
1. Recurring regularly or frequently: the continual need to pay the mortgage.
2. seeking ways to increase and maintain the revolving fund. The administrative costs are incorporated in the departmental repayment agreement primarily to provide a mechanism for the revolving fund to increase future funds available for energy improvements.
The facility-operating department agrees to install or have installed under its supervision the energy conservation measures specified on a schedule attached to the MOU. It also agrees to make quarterly payments to the Green Lights Revolving Fund through the city's internal billing financial system. The facility-operating department repays the revolving fund the amount of the total project cost plus 25 percent over a specified time for fund replenishment replenishment
the addition of an appropriate quantity of properly prepared solution containing the correct concentration of chemicals to the developer solutions used in radiography. and administrative fees.
The initial requests for Green Lights Revolving Fund projects were solicited by the finance and administration department from directors of the facility-operating departments. The interdepartmental memo, stating that the office of energy management had been charged with fund management responsibility, explained the fund and its operations as a special revenue fund created as an internal energy improvement performance-contract-based revolving fund. The initial project solicitation memo included several documents:
* Green Lights Revolving Fund procedure,
* Green Lights Revolving Fund project selection criteria (Exhibit 1),
* project application kit, and
* sample interdepartmental repayment MOU.
Because of the limited seed funds available in the Green Lights Revolving Fund, the initial solicitation of projects specified that projects to be funded should be small scale ($5,000 to $25,000) and have relatively short payback periods Payback Period
The length of time required to recover the cost of an investment.
Calculated as: (one to two years). The criteria also emphasized short installation periods and measurable energy savings.
As departments submitted energy improvement projects, energy management staff worked with them to define the types of projects most likely to be funded through this program or to refine their project submissions. Energy management staff reviewed submissions and conducted independent energy audits of the proposed projects to determine the reliability and accuracy of the project costs, estimated energy savings, baseline energy costs, and payback periods. Independent verification of the accuracy of the departmental project information was completed to ensure project selection was a fiscally sound process. This independent verification increased the likelihood that the projects selected would be able to repay the funds advanced on time.
The two projects selected for funding were lighting upgrades with relatively short payback periods. The only savings which can be counted through the funding mechanism are electrical and natural gas cost avoidances Cost avoidance is a management accounting term referring to an expense one has avoided incurring. It is commonly used in the field of energy management to describe the energy costs you avoided due to energy management initiatives. , since they are the only source of budgeted funds from which savings can be accessed and transferred to the revolving fund. Maintenance labor savings cannot be captured through this mechanism, although these savings may be present as a result of the energy improvements. If the savings occur, they will be captured in the facility-operating department's budget and are not available for replenishment of the Green Lights Revolving Fund.
Monitoring the Projects
The two initial energy improvement projects selected for funding from the Green Lights Revolving Fund were lighting upgrades in a tennis center and a solid waste department regional service center. Only materials are being funded from the revolving fund; labor costs are absorbed by the facility-operating department budgets. Installation of the approved energy improvements has been completed recently, and the energy savings are starting to occur.
Energy management staff have established the baseline energy costs at each affected facility and have developed an energy savings accounting Savings Account
A deposit account intended for funds that are expected to stay in for the short term. A savings account offers lower returns than the market rates.
Notes: form to be used to document the actual savings from the baseline energy costs. The project savings accounting form also will be used to determine when the initial projects' costs plus the administrative fund costs have been recovered and the fund has been replenished.
The City of Houston learned several lessons in establishing its Green Lights Revolving Fund. The first relates to the amount of time and the level of effort required to establish an internal, dedicated revolving fund. Since establishing a dedicated internal revolving fund is not typical for all governmental units, it requires significant effort to explain and convince the various affected groups of the desirability of the course of action. Identifying all the affected groups and steps was lengthy and time consuming but essential to successfully establishing such a funding mechanism. It is useful to have a "champion" within the organization advocating the creation of this funding mechanism, with the time to respond to questions and objections from affected groups as to why to establish this funding mechanism. In Houston, it also was critical to have support from the facility-operating departments and from the finance director.
All affected groups should have been informed of all the steps needed to create the revolving fund in a timely manner. Because not all groups were contacted in a timely manner in Houston, several steps had to be repeated, and the time required to establish the fund was lengthened length·en
tr. & intr.v. length·ened, length·en·ing, length·ens
To make or become longer.
lengthen·er n. . The longer it takes to establish the fund, the more likely it is that key personnel changes in affected groups or other external actions (e.g., budget shortfalls, elections, etc.) will affect its establishment.
Another important lesson learned from the project is the importance of having sufficient seed funds from multiple sources to warrant the time and effort required to establish an internal, dedicated revolving fund. In retrospect, the city should not have accepted the limited amount of UCETF grant funds - even though the grant requirements were used several times with recalcitrant recalcitrant adjective Poorly responsive to therapy city groups as justification for establishing the revolving fund.
It is important to have multiple recurring funding sources for the revolving fund when these funding sources can be identified and directed to the fund. The use of utility rebate sharing and the creation of performance contract "excess savings" sharing were reliable, although limited, additional funding sources for the revolving fund.
The Green Lights seed funding was so small, however, that only partial funding (materials only) for two small-scale energy improvement projects was available for the initial solicitation process. Additional project solicitations will be delayed until the existing project loans are repaid. As additional funds are identified and made available to the energy revolving fund, other projects and other selection criteria can be accommodated.
A final caution regarding the establishment of an internal revolving fund: If the fund is to replenish itself, it is important that projects be selected with firm and documentable energy savings. Initially, projects with a strong probability of achieving the specified repayment in the specified time were funded to demonstrate the viability of the revolving fund and savings projections. If the initial projects do not achieve the projected savings, the fund will be depleted de·plete
tr.v. de·plet·ed, de·plet·ing, de·pletes
To decrease the fullness of; use up or empty out.
[Latin d , with the result being another one-time fund dedicated to energy projects but no continuing source of monies for these purposes.
Transferability of the Program
The biggest success from Houston's experience is an existing, ongoing internal revolving fund dedicated to energy improvements, with all the procedures and documentation completed and capable of continuing it at any level of funding. Although the initial funding was small, as the fund "revolves," the fund administration fee will increase the amount of funds available for reprogramming Reprogramming refers to erasure and remodeling of epigenetic marks, such as DNA methylation, during mammalian development. After fertilization some cells of the newly formed embryo migrate to the germinal ridge and will eventually become the germ cells into future energy improvements, with all savings recaptured by the city rather than shared with a private contractor.
Because the initial projects selected were "safe" projects, the probability of projects achieving the projected energy savings in the specified time is excellent. Once the fund has replenished its initial funding, not only will additional projects be funded but the likelihood of additional nonrevolving funding sources increases so that even more energy improvements can be implemented.
Several guidelines guidelines,
n.pl a set of standards, criteria, or specifications to be used or followed in the performance of certain tasks. and documents were developed for the Houston Green Lights Revolving Fund project which can be modified for use elsewhere. The Green Lights executive order can be used as a model document for expanding the scope of the EPA Green Lights program to accommodate all energy improvements. The rebate sharing and performance contract "excess savings" sharing procedures can be adopted elsewhere with little modification and can provide ongoing funding sources for the revolving fund. Perhaps the most useful documents to emerge from the Houston Green Lights Revolving Fund project are the interdepartmental repayment memorandum of understanding (the "internal performance contract"), the project selection criteria, the project application kit, and the project savings accounting form. By using these documents and guidelines, other jurisdictions will have a head start in establishing their own internal revolving fund dedicated to energy improvement projects and ultimately have a continuing source of funding for these projects.
DEWAYNE HUCKABAY is the purchasing agent Noun 1. purchasing agent - an agent who purchases goods or services for another
agent - a representative who acts on behalf of other persons or organizations for the City of Houston, Texas, and also manages the fleet and environmental management group in the finance and administration department. He has worked in various executive management positions for the city for almost 20 years. He holds a bachelor's degree in political science from Rice University, earned a master's degree master's degree
An academic degree conferred by a college or university upon those who complete at least one year of prescribed study beyond the bachelor's degree.
Noun 1. in planning from Rutgers University Rutgers University, main campus at New Brunswick, N.J.; land-grant and state supported; coeducational except for Douglass College; chartered 1766 as Queen's College, opened 1771. Campuses and Facilities
Rutgers maintains three campuses. , and was one of the initial graduates of the Lyndon B. Johnson School of Public Affairs's Public Executive Institute. Copies of the full report Establishing a Green Lights Revolving Fund can be obtained for $10 (free for Public Technology, Inc. members) from PTI PTI - Portable Tool Interface Publications, P.O. Box 321, Annapolis Junction, MD 20701 (phone: 800/784-8976; e-mail: email@example.com). For additional information on the process described in this article, contact the author at 713/658-4517.