By Holzheauser                                        H.B. No. 3530

         Substitute the following for H.B. No. 3530:

         By Moffat                                         C.S.H.B. No. 3530

                                A BILL TO BE ENTITLED

 1-1                                   AN ACT

 1-2     relating to energy savings projects for school districts,

 1-3     institutions of higher education and state agencies.

 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

 1-5           SECTION 1.  Section 44.901, Subchapter Z, Title 2, Education

 1-6     Code, is amended to read as follows:

 1-7           Sec. 44.901.  ENERGY CONSERVATION MEASURES.  (a)  The board

 1-8     of trustees of a school district may enter into a contract for

 1-9     energy conservation measures to reduce energy consumption or

1-10     operating costs of school facilities in accordance with this

1-11     section.

1-12           (b)  A contract to which this section applies includes a

1-13     contract for the installation of:

1-14                 (1)  insulation of the building structures and systems

1-15     within the building;

1-16                 (2)  storm windows or doors, caulking or

1-17     weatherstripping, multiglazed windows or doors, heat absorbing or

1-18     heat reflective glazed and coated window or door systems, or other

1-19     window or door system modifications that reduce energy consumption;

1-20                 (3)  automatic energy control systems, including

1-21     computer software and technical data licenses;

1-22                 (4)  heating, ventilating, or air-conditioning system

1-23     modifications or replacements;

1-24                 (5)  lighting fixtures that increase energy efficiency;

 2-1     [or]

 2-2                 (6)  energy recovery systems;

 2-3                 (7)  electric systems improvements; or

 2-4                 (8)  other energy conservation-related improvements or

 2-5     equipment (including improvements or equipment relating to

 2-6     renewable energy).

 2-7           (c)  All energy conservation measures must comply with

 2-8     current local, state, and federal construction and environmental

 2-9     codes and regulations.  Notwithstanding anything to the contrary in

2-10     subsection (b), a contract for energy conservation measures shall

2-11     not include improvements or equipment that allow or cause water

2-12     from any condensing, cooling or industrial process or any system of

2-13     nonpotable usage over which the public water supply system

2-14     officials do not have sanitary control, to be returned to the

2-15     potable water supply.

2-16           (d)  The person with whom the board contracts must be

2-17     experienced in the design, implementation, and installation of

2-18     energy conservation measures.

2-19           (e) [(c)]  Before entering into a contract for energy

2-20     conservation measures, the board shall require the provider of the

2-21     energy conservation measures to file with the board a payment and

2-22     performance bond relating to the installation of energy

2-23     conservation measures that is in an amount the board finds

2-24     reasonable and necessary to protect the interests of the school

2-25     district and that may also cover[s] the value of the guaranteed

2-26     savings on the contract and is conditioned on the faithful

2-27     execution of the terms of the contract.

 3-1           (f) [(d)]  A contract for energy conservation measures, with

 3-2     respect to existing buildings or facilities, may be a

 3-3     lease/purchase contract, with a term not to exceed 10 years, that

 3-4     meets federal tax requirements for tax-free municipal leasing or

 3-5     long-term financing.  The contract shall contain provisions

 3-6     pursuant to which the provider of the energy conservation measures

 3-7     guarantees the amount of the savings to be realized by the school

 3-8     district under the contract.  If the term of a contract for energy

 3-9     conservation measures exceeds one year, the school district's

3-10     contractual obligations in any one year during the term of the

3-11     contract may not exceed the total energy and operating cost

3-12     savings, including but not limited to electrical, gas, or other

3-13     utility cost savings and operating cost savings resulting from

3-14     automatic monitoring and control as determined by the school

3-15     district in this subsection, divided by the number of years in the

3-16     contract term.

3-17           (g) [(e)]  A contract under this section may be let under

3-18     competitive proposal procedures.  Notice of the request for

3-19     proposals shall be published in the manner provided for competitive

3-20     bidding.  Requests for proposals must solicit quotations and must

3-21     specify the relative importance of guaranteed savings, price,

3-22     return on investment, financial performance and stability, quality,

3-23     technical ability, experience, and other evaluation factors.  The

3-24     contract shall be awarded to the responsible offeror whose

3-25     proposal, following negotiations, is determined to be the most

3-26     advantageous to the school district considering the guaranteed

3-27     savings and other evaluations factors set forth in the request for

 4-1     proposals.

 4-2           (h) [(f)]  To obtain the best final offers, the school

 4-3     district may allow proposal revisions after submissions and before

 4-4     the award of the contract.

 4-5           SECTION 2.  Section 51.927, Subchapter Z, Title 3, Education

 4-6     Code, is amended to read as follows:

 4-7           Sec. 51.927.  Energy Conservation Measures.  (a)  The

 4-8     governing board of an institution of higher education may enter

 4-9     into a contract for energy conservation measures to reduce energy

4-10     consumption or operating costs of institutional facilities in

4-11     accordance with this section.

4-12           (b)  A contract to which this section applies includes a

4-13     contract for the installation of:

4-14                 (1)  insulation of a building structure and systems

4-15     within a building;

4-16                 (2)  storm windows of doors, caulking or weather

4-17     stripping, multiglazed windows or doors, heat-absorbing or

4-18     heat-reflective glazed and coated window or door systems, or other

4-19     window or door system modifications that reduce energy consumption;

4-20                 (3)  automatic energy control systems, including

4-21     computer software and technical data licenses;

4-22                 (4)  heating, ventilating or air conditioning system

4-23     modifications or replacements;

4-24                 (5)  lighting fixtures that increase energy efficiency;

4-25                 (6)  energy recovery systems;

4-26                 (7)  electric systems improvements; or

4-27                 (8)  other energy conservation related improvements or

 5-1     equipment (including improvements or equipment related to renewable

 5-2     energy).

 5-3           (c)  All energy conservation measures must comply with

 5-4     current local, state, and federal construction and environmental

 5-5     codes and regulations.  Notwithstanding anything to the contrary in

 5-6     subsection (b), a contract for energy conservation measures shall

 5-7     not include improvements or equipment that allow or cause water

 5-8     from any condensing, cooling or industrial process or any system of

 5-9     nonpotable usage over which the public water supply system

5-10     officials do not have sanitary control, to be returned to the

5-11     potable water supply.

5-12           (d) [(c)]  The entity [person] with whom the board contracts

5-13     must be experienced in the design, implementation, and installation

5-14     of energy conservation measures.

5-15           (e) [(d)]  Before entering into a contract for energy

5-16     conservation measures, the board shall require the provider of the

5-17     energy conservation measures to file with the board a payment and

5-18     performance bond that is in an amount the board finds reasonable

5-19     and necessary to protect the interests of the institution and is

5-20     conditioned on the faithful execution of the terms of the contract.

5-21           (f) [(e)]  The board may enter into a contract for a period

5-22     of more than one year for energy conservation measures with an

5-23     entity [a person] if the board finds that the amount the

5-24     institutions would spend on the energy conservation measures will

5-25     not exceed the amount to be saved in energy and operating costs

5-26     over 10 years from the date of installation.  If the term of a

5-27     contract for energy conservation measures exceeds one year, the

 6-1     board's contractual obligation in any year during the term of the

 6-2     contract may not exceed the total energy and operating cost

 6-3     savings, including but not limited to electrical, gas, or other

 6-4     utility cost savings and operating cost savings resulting from

 6-5     automatic monitoring and control, as determined by the board in

 6-6     this subsection, divided by the number of years in the contract

 6-7     term.  The board shall consider all costs of the energy

 6-8     conservation measures, including costs of design, engineering,

 6-9     installation, maintenance, repairs and debt service.

6-10           (g) [(f)]  A contract for energy conservation measures may be

6-11     a lease/purchase contract, with a term not to exceed 10 years, that

6-12     meets federal tax requirements for tax-free municipal leasing or

6-13     long term financing.  The contract shall contain provisions

6-14     pursuant to which the provider of the energy conservation measures

6-15     guarantees the amount of the savings to be realized by the

6-16     institution of higher education under the contract.

6-17           (h) [(g)]  A contract under this section may be let under

6-18     competitive sealed proposal procedures.  Notice of the request for

6-19     proposals shall be given in the manner provided for in Chapter

6-20     2156, Government Code [Sec. 3.12, Article 601b, Revised Statutes].

6-21     The Texas Higher Education Coordinating Board, in consultation with

6-22     the State Energy Conservation Office and the Texas Energy

6-23     Coordination Council, shall establish guidelines and an approval

6-24     process for contracts awarded under this section.  The State Energy

6-25     Conservation Office and the Texas Energy Coordination Council shall

6-26     review the selected proposal before a contract is awarded [The

6-27     institution shall submit the proposals to the energy management

 7-1     center for review and comment before awarding the contract].  The

 7-2     State Energy Conservation Office [energy management center] may

 7-3     provide a cost-benefit analysis of the proposals and analysis of

 7-4     the guaranteed savings projected by offerors and may charge a fee

 7-5     for this service.   The contract shall be awarded to the

 7-6     responsible offeror whose proposal, following negotiations, is

 7-7     determined by the institution to be the most advantageous to the

 7-8     institution considering the guaranteed savings and other evaluation

 7-9     factors set forth in the request for proposals, except that if the

7-10     institution finds that no offer is acceptable, it shall refuse all

7-11     offers.

7-12           (i) [(h)]  In accordance with regulations adopted by the

7-13     institution, the institution may conduct discussions with offerors

7-14     who submit proposals and who are determined to be reasonably

7-15     qualified for the award of the contract.  Offerors shall be treated

7-16     fairly and equally with respect to any opportunity for discussion

7-17     and revision of proposals.  To obtain the best final offers, the

7-18     institution may allow proposal revisions after submissions and

7-19     before the award of the contract.

7-20           (j) [(i)]  If provided in a request for proposals under

7-21     Subsection (g) of this section, proposals shall be opened in a

7-22     manner that avoids disclosure of the contents to competing offerors

7-23     and keeps the proposals secret during negotiations.  All proposals

7-24     are open for public inspection after a contract is awarded unless

7-25     the information is excepted from disclosure under Chapter 552,

7-26     Government Code.

7-27           (k) [(j)]  The legislature shall base an institution's

 8-1     appropriation for energy costs during a fiscal year on the sum of:

 8-2                 (1)  the institution's estimated energy costs for that

 8-3     fiscal year; and

 8-4                 (2)  if a contract under this section is in effect, the

 8-5     institution's estimated net savings resulting from the contract

 8-6     during the contract term, divided by the number of years in the

 8-7     contract term.

 8-8           [(k)  The Texas Higher Education Coordinating Board, in

 8-9     consultation with the energy management center shall establish

8-10     guidelines and an approval process for energy conservation

8-11     measures.]

8-12           SECTION 3.  Subchapter I, Chapter 2166, Title 10, Government

8-13     Code, is amended by adding Section 2166.406 to read as follows:

8-14           Sec. 2166.406.  ENERGY CONSERVATION MEASURES.  (a)

8-15     Notwithstanding any other provisions of this chapter, the governing

8-16     body of a state agency, without the consent of the commission, may

8-17     enter into a contract for energy conservation measures to reduce

8-18     energy consumption or operating costs of governmental facilities in

8-19     accordance with this section.

8-20           (b)  A contract authorized under this chapter includes a

8-21     contract for the installation of:

8-22                 (1)  insulation of the building structure and systems

8-23     within the building;

8-24                 (2)  storm windows or doors, caulking or weather

8-25     stripping, multiglazed windows or doors, heat absorbing or heat

8-26     reflective glazed and coated window or door systems, or other

8-27     window or door system modifications that reduce energy consumption;

 9-1                 (3)  automatic energy control systems, including

 9-2     computer software and technical data licenses;

 9-3                 (4)  heating, ventilating, or air-conditioning system

 9-4     modifications or replacements;

 9-5                 (5)  lighting fixtures that increase energy efficiency;

 9-6                 (6)  energy recovery systems;

 9-7                 (7)  electric systems improvements; or

 9-8                 (8)  other energy conservation-related or improvements

 9-9     or equipment (including improvements or equipment related to

9-10     renewable energy).

9-11           (c)  All energy conservation measures must comply with

9-12     current local, state, and federal construction and environmental

9-13     codes and regulations.  Notwithstanding anything to the contrary in

9-14     subsection (b), a contract for energy conservation measures shall

9-15     not include improvements or equipment that allow or cause water

9-16     from any condensing, cooling or industrial process or any system of

9-17     nonpotable usage over which the public water supply system

9-18     officials do not have sanitary control to be returned to the

9-19     potable water supply.

9-20           (d)  The entity with whom the board contracts must be

9-21     experienced in the design, implementation, and installation of

9-22     energy conservation measures.

9-23           (e)  Before entering into a contract for energy conservation

9-24     measures, the governing body of the state agency shall require the

9-25     provider of the energy conservation measures to file with the

9-26     governing body  a payment and performance bond that is in an amount

9-27     the governing body finds reasonable and necessary to protect the

 10-1    interests of the state agency and that is conditioned on the

 10-2    faithful execution of the terms of the contract.

 10-3          (f)  The state agency may enter into a contract for a period

 10-4    of more than one year for energy conservation measures with an

 10-5    entity if the state agency finds that the amount the state agency

 10-6    would spend on the energy conservation measures will not exceed the

 10-7    amount to be saved in energy and operating costs over 10 years from

 10-8    the date of installation.

 10-9          (g)  A contract for energy conservation measures, with

10-10    respect to existing buildings or facilities, may be a

10-11    lease/purchase contract with a term not to exceed 10 years, that

10-12    meets federal tax requirements for tax-free municipal leasing or

10-13    long term financing.  The contract shall contain provisions

10-14    pursuant to which the provider of the energy conservation measures

10-15    guarantees the amount of the savings to be realized by the state

10-16    agency under the contract.  If the term of a contract for energy

10-17    conservation measures exceeds one year, the agency's contractual

10-18    obligation in any year during the term of the contract may not

10-19    exceed the total energy and operating cost savings, including but

10-20    not limited to electrical, gas, or other utility cost savings and

10-21    operating cost savings resulting from automatic monitoring and

10-22    control, as determined by the state agency in this subsection,

10-23    divided by the number of years in the contract term.

10-24          (h)  A contract under this chapter may be let under

10-25    competitive sealed proposal procedures.  Notice of the request for

10-26    proposals shall be given in the manner provided for in Chapter

10-27    2156, Government Code.  Before awarding the contract, the state

 11-1    agency shall submit the selected proposal to the State Energy

 11-2    Conservation Office, and the Texas Energy Coordination Council for

 11-3    review and comment before awarding the contract.  The State Energy

 11-4    Conservation Office and the Texas Energy Coordination Council will

 11-5    provide a cost-benefit analysis of the proposals and an analysis of

 11-6    the guaranteed savings projected by offerors and may charge a fee

 11-7    for this service.  The contract shall be awarded to the responsible

 11-8    offeror whose proposal, following negotiations, is determined to be

 11-9    the most advantageous to the state agency considering the savings

11-10    and other evaluation factors set forth in the request for proposals

11-11    except that if the state agency finds that no offer is acceptable,

11-12    it shall refuse all offers.

11-13          (i)  In accordance with regulations adopted by the state

11-14    agency, the state agency may conduct discussions with offerors who

11-15    submit proposals and who are determined to be reasonably qualified

11-16    for the award of the contract.  Offerors shall be treated fairly

11-17    and equally with respect to any opportunity for discussion and

11-18    revision of proposals.

11-19          (j)  If provided in a request for proposals, proposals shall

11-20    be opened in a manner that avoids disclosure of the contents to

11-21    competing offerors and keeps the proposals secret during

11-22    negotiations.  All proposals are open for public inspection after a

11-23    contract is awarded unless the information is excepted from

11-24    disclosure under Chapter 552, Government Code.

11-25          (k)  To obtain the best final offers, the state agency may

11-26    allow proposal revisions after submissions and before the award of

11-27    the contract.  Final review and approval of the contract will be

 12-1    provided by the State Energy Conservation Office.

 12-2          (l)  The legislature shall base an agency's appropriation for

 12-3    energy costs during a fiscal year on the sum of:

 12-4                (1)  the agency's estimated energy costs for that

 12-5    fiscal year; and

 12-6                (2)  if a contract under this section is in effect, the

 12-7    agency's estimated net savings resulting from the contract during

 12-8    the contract term, divided by the number of years in the contract

 12-9    term.

12-10          SECTION 4.  The importance of this legislation and the

12-11    crowded condition of the calendars in both houses create an

12-12    emergency and an imperative public necessity that the

12-13    constitutional rule requiring bills to be read on three several

12-14    days in each house be suspended, and this rule is hereby suspended,

12-15    and that this Act take effect and be in force from and after its

12-16    passage, and it is so enacted.