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NY Green Bank announced the closing of an equipment financing transaction with the Northport-East Northport Union Free School District (the District) in the Town of Huntington as part of an approximately $12.9 million energy efficiency project expected to reduce the district's energy costs by more than $1 million annually. The energy efficiency efforts are expected to cut greenhouse gas emissions equivalent to taking more than 500 cars off the road and keeping them off the road for 20 years.
Other financial participants in the project are Bank of America Merrill Lynch and Signature Public Funding Corp., a subsidiary of Signature Bank. In reducing the overall amount of electricity the state consumes, energy efficiency projects support New York's Clean Energy Standard, which mandates that 50 percent of all electricity used in the state come from renewable sources by 2030.
The project also supports Governor Andrew M. Cuomo's Reforming the Energy Vision strategy to build a clean, resilient and affordable energy system for all New Yorkers and the state's goal to reduce greenhouse gas emissions 40 percent by 2030 from 1990 levels. "Energy efficiency measures improve building environments for students and staff, reduce school operating costs and decrease greenhouse gas emissions," said Alfred Griffin, NY Green Bank President.
"By working alongside other financial institutions, NY Green Bank is facilitating the financing of these important long-term energy efficiency projects." As a result of this financing, the District will be able to install energy efficiency measures at nine schools and at its administration building, including new energy management systems; upgrades to heating, ventilation and air conditioning systems; new lighting fixtures and controls; and insulation. The project development is expected to begin this fall and be completed in a year.
This was the first energy efficiency equipment leasing transaction to be completed by NY Green Bank. It establishes a standardized approach for equipment leasing financing that will broaden the availability of energy efficiency projects to municipalities, universities, schools and healthcare facilities.
Projects that deeply reduce energy use typically require longer-term financing for municipalities, universities, schools and hospitals than is available through private capital providers alone. John Rhodes, President and CEO, NYSERDA, said, "NY Green Bank's innovative deal finances important energy-saving investments for the Northport Schools. This kind of financing will make it easier for school districts, universities and other organizations to reduce energy use and cut costs, while improving the environment, exactly as intended under Governor Cuomo's clean energy strategy."
NY Green Bank's involvement in this project allowed the lease term to be extended to 18 years from the 10-year term originally proposed by the bank market, which provides more time for the school district to pay off the lease and lowers monthly payments, while providing expected annual operating savings greater than the lease payments. NY Green Bank is providing an 18-year $8.7 million investment, and Signature Public Funding Corp. is investing in a 10-year $4.2 million portion of the lease.
Bank of America Merrill Lynch arranged and structured the lease. NY Green Bank is a division of the New York State Energy Research and Development Authority (NYSERDA) and a key component of New York's 10-year, $5.3 billion Clean Energy Fund (CEF) to accelerate the use of clean energy, reduce greenhouse gas emissions, increase energy efficiency, and spur economic development in New York State.
With a $1 billion capitalization, NY Green Bank is the nation's largest green bank and is a critical component of Governor Cuomo's Reforming the Energy Vision (REV) strategy to build a clean, affordable and resilient energy system for all New Yorkers. NY Green Bank's current active pipeline (i.e. transactions where there is agreement in principle between parties and momentum to move the transaction toward final execution and closing) includes community solar; residential and commercial energy efficiency; residential solar, commercial and industrial solar; municipal, university, school and hospital energy efficiency; and microgrids.
With this latest transaction, NY Green Bank has now closed 12 transactions, committing $207 million of its capital, stimulating over $966 million in total investments in clean energy projects across the state. These projects are expected to reduce greenhouse gas emissions by 4.3 million metric tons - equivalent to taking 49,000 cars off the road for the next 19 years - and help the state achieve its goal of a 40 percent emissions reduction by 2030.
