CHICAGO — The Chicago Infrastructure Trust is launching an initiative that could lead to private financing for the installation of combined heat and power systems in some public buildings.
The trust board approved moving forward with the initiative at a recent meeting. The timing of the so-called CHP system program is a mid-November deadline to apply for an Illinois Department of Commerce and Economic Opportunity grant program. It offers financial help of up to $2 million per project for public sector CHP systems.
The installation of the systems that run more efficiently than conventional operations would help the city and its sister agencies lower energy costs, reduce emissions and energy consumption, improve air quality, and aid the city in meeting sustainability goals.
The trust anticipates following the same Energy Services Agreement model it established on its $12.8 million deal last year. It marked only the second tax-exempt ESA transaction completed to date. The structure kept the financing off the city's balance sheet or credit profile.
The model has some similarities to a privately placed revenue bond in that creditors' claims are based on the pledged revenues, which come from anticipated savings achieved through the projects, but energy contractors guaranteed the savings and the funds flow through the trust.
The CHP program will likely include investment tax credits, so the trust will be looking for a for-profit partner to purchase the credits. Over the next month, trust staff said it would be working with the city and its sister agencies to identify potential buildings.
The latest trust effort comes as projects being completed under its first program — energy upgrades to some city buildings financed in a $12.8 million private placement-like transaction — remain on track, staff members told the board.
The trust also is exploring a compressed natural gas fueling station program after receiving an unsolicited proposal from a "leading national provider of CNG fuel" that "designs, constructs, operates, and maintains their own fueling stations," according to trust documents.
The trust will soon launch an open bidding process to solicit additional proposals and is seeking advice from natural gas experts on the bid process and for help on the potential development of the program. The goal is to reduce city and public fuel costs, reduce greenhouse emissions, and help the city achieve alternative fuel fleet goals.
On another program front, the trust reported receiving 15 responses to its open bidding process to establish a PACE, for Property Assessed Clean Energy, program. The aim is to "enable government, not-for-profit, and commercial sector building owners to perform energy and water efficiency as well as renewable energy upgrades to their buildings by leveraging the city's existing property tax collections mechanisms," according to trust documents.
The trust is requesting additional information from potential bidders based on an ordinance it has drafted with the help of law firm Kirkland & Ellis and the city.
The ordinance is designed to lay out rules for such a program and provide lenders with more repayment security as existing state law is limited to language allowing local governments to undertake such programs.
If potential lenders show "an appetite" to back a city PACE program based on the ordinance terms, the trust will forward it to the City Council for consideration later this year, said Claire Tramm, energy director at the trust.
The proposals submitted so far exceeded $1 billion in value, said trust chief executive officer Stephen Beitler.
In another project update, the trust staff said they are assisting the Chicago Transit Authority in negotiating final terms with cellular phone carriers on an agreement that would finance upgrading the CTA to a 4G cellular network in its underground tunnels that serve its rail transit lines.
Two other programs remain in various stages. A draft request for information is being reviewed to finance city streetlight upgrades and final engineering reviews of swimming pool project upgrades is still underway as part of what would mark the trust's second energy retrofit program.