DALLAS — The Louisiana State Bond Commission gave the go-ahead Thursday for the sale of $31 million of tax-credit bonds to finance an energy-efficiency effort at state prisons.
The Louisiana Community Development Authority will issue the taxable, 20-year qualified energy conservation bonds for the state Department of Corrections.
Proceeds will be used to replace existing heating, lighting, hot water, and other electrical system at nine state prisons.
The Joint Legislative Committee on the Budget must give its approval before the bonds can be issued.
The bonds will come from the $45 million of energy conservation debt capacity given to Louisiana under the 2009 federal stimulus act.
Debt service on the bonds will be supported by the cost savings realized from the more efficient modern equipment at nine state prisons.
Whitman Kling Jr., director of the bond commission, said the program will be structured so that the equipment is owned by the LCDA and leased to the Corrections Department.
When the bonds mature in 20 years, Kling said, the energy systems would be donated by the authority to the the department.
Corrections undersecretary Thomas Bickham 3dsaid the current equipment systems at the prisons are overdue for replacement.
“Most of these units are 30 years old,” Bickham told the Bond Commission. “They are not efficient and they require a lot of maintenance.”
Bickham said Johnson Controls Inc., which will install the new energy equipment, has guaranteed the cost savings will exceed debt service on the bonds.
The Corrections Department will realize energy savings of $2.3 million a year with the new equipment, Bickham said.
“We will continue to ask the Legislature for the same level of utility funding as we do now, and we will pay for the bonds with the energy savings we achieve,” he said.
Bickham said the bonds will be placed with JPMorgan Chase.
State Treasurer John Kennedy, who chairs the Bond Commission, questioned the validity of the estimated cost savings. He said his concerns were based on the state’s experiences with similar contracts that did not deliver the promised level of savings.
State facilities director Jerry Jones said earlier problems led to stronger legislative requirements on energy-savings efforts.
“State law says cost savings have to be equivalent to annual debt service plus $1,” Jones said. “Earlier contracts had lots of 'outs’ in them, but those are gone. This is an iron-clad contract.”
The commission unanimously selected Lamont Financial Services Corp. as the state’s new financial advisor. Lamont will succeed Government Finance Associates Inc.
The contract includes an annual fee of $495,000 plus expenses.
Renee Boicourt of Lamont said the firm will begin work immediately.
“We’ve got quite a bit of work to do, so we’re ready to hit the ground running,” she said.
The commission also authorized bond sales totaling $310 million by two hospital districts in Jefferson Parish.
Jefferson Parish Council Hospital District 1 will issue up to $140 million, with refunding bonds accounting for $98 million. Jefferson Parish Council Hospital District 2 will issue $170 million, including $116 million of refunding bonds.