Looking to expand shared services opportunities to towns and school districts, Burlington County Freeholder Director Bruce Garganio said recently he would call on the freeholder board to authorize the creation of a lease bank that could provide low-cost loans to municipalities exclusively for green energy capital improvements.
Freeholders have been working cooperatively with the Burlington County Bridge Commission on a “Greenbacks to Go Green” shared services initiative that has opened the door for green energy grants and savings to public entities in the county.
At last count, some 64 local units, mostly municipalities and school districts, are participating in initial phases of the Greenbacks program.
The commission has provided freeholders with the overview of a pilot program that would enable towns and schools to bolster green energy investment opportunities through a lease bank.
“Through the Greenbacks program we have been able to take the complexities and the scare out of conservation initiatives for our local officials,” said Garganio. “Through the lease bank we will be able to mitigate the cost of investment and open the door for both immediate and long-term savings.
“The upside of all of this is that, from a cost-savings perspective, they get two bites of the apple,” he added. “They will save money both on their energy projects, and on the cost of financing those projects.”
The commission’s presentation outlined how grant-funded energy audits identify energy improvements to municipal or school facilities, which could then require upfront financing.
“A new HVAC system may generate thousands of dollars in savings for a town,” said Commission Chairman John Comegno. “Through the lease bank, that town can more quickly secure the funds needed to install the system, and the financing costs will be minimized because the bank’s funds will be issued with the county’s backing.”
Once created, the lease bank would have a maximum $10 million available to lend. Loans approved by the commission and county would have the county’s guarantee, which carries with it a AA bond rating, resulting in lower interest rates than towns can normally procure. Loan terms would be up to 15 years.
Citing an example, Financial Consultant Peter Nissen said that one of the potential pilot participants, Palmyra Borough, could undertake $247,500 in identified capital improvements and would realize projected energy savings of $390,000 over 15 years. At the same time, the cost of financing would be an estimated $10,000 less through a lease bank, than through more traditional bond financing.
Comegno said he was confident that local and school officials would embrace the lease bank, and that it would give them additional ability and incentive to move forward with projects recommended through the energy audits.
Over the past 10 years, the freeholder board has worked cooperatively with the commission to provide low-cost aggregate bond financing to the towns and other local entities on major capital projects, ranging from road improvements to land acquisition to large equipment purchases.
A total of $481 million has been issued in bonds to 26 towns and other local units, resulting in $14 million in interest and other finance costs savings.
“The lease bank will operate like a revolving loan program, and give municipalities quicker access to funds,” Garganio said, “and I think that’s important at a time when local officials are scrambling to find savings, stay within mandated CAPs, reduce costs, and save taxes.”
