A BILL TO BE ENTITLED
AN ACT to authorize governmental units to enter into guaranteed water savings contracts that provide for the installation of water conservation measures in existing facilities, to authorize the funding of these contracts in the same manner as guaranteed energy savings contracts, to raise the cap for financing contracts for energy and water conservation measures, to expand the State's energy policy and life‑cycle cost analysis to include water conservation, and to make conforming changes.
The General Assembly of North Carolina enacts:
SECTION 1.  The title of Article 3B of Chapter 143 of the General Statutes reads as rewritten:
"Energy Conservation and Water Conservation in Public Facilities."
SECTION 2.  Part 2 of Article 3B of Chapter 143 of the General Statutes reads as rewritten:
"Part 2. Guaranteed Energy Savings Contracts and Guaranteed Water Savings Contracts for Governmental Units.
"§ 143‑64.17.  Definitions.
As used in this Part:
(1)	"Energy conservation measure" means a facility alteration, training, or services related to the operation of the facility, when the alteration, training, or services provide anticipated energy savings. Energy conservation measure includes any of the following:
a.	Insulation of the building structure and systems within the building.
b.	Storm windows or doors, caulking, weatherstripping, multiglazed windows or doors, heat‑absorbing or heat‑reflective glazed or coated window or door systems, additional glazing, reductions in glass area, or other window or door system modifications that reduce energy consumption.
c.	Automatic energy control systems.
d.	Heating, ventilating, or air‑conditioning system modifications or replacements.
e.	Replacement or modification of lighting fixtures to increase the energy efficiency of a lighting system without increasing the overall illumination of a facility, unless an increase in illumination is necessary to conform to the applicable State or local building code or is required by the light system after the proposed modifications are made.
f.	Energy recovery systems.
g.	Cogeneration systems that produce steam or forms of energy such as heat, as well as electricity, for use primarily within a building or complex of buildings.
h.	Other energy conservation measures.
(2)	"Energy savings" means a measured reduction in fuel costs, energy costs, or operating costs created from the implementation of one or more energy conservation measures when compared with an established baseline of previous fuel costs, energy costs, or operating costs developed by the governmental unit.
(2a)	"Governmental unit" means either a local governmental unit or a State governmental unit.
(3)	"Guaranteed energy savings contract" means a contract for the evaluation, recommendation, or implementation of energy conservation measures, including the design and installation of equipment or the repair or replacement of existing equipment, in which all payments, except obligations on termination of the contract before its expiration, are to be made over time, and in which energy savings are guaranteed to exceed costs.
(3a)	"Guaranteed water savings contract" means a contract for the evaluation, recommendation, or implementation of water conservation measures, including the design and installation of equipment or the repair or replacement of existing equipment, in which all payments, except obligations on termination of the contract before its expiration, are to be made over time, and in which water savings are guaranteed to exceed costs.(4)	"Local governmental unit" means any board or governing body of a political subdivision of the State, including any board of a community college, any school board, or an agency, commission, or authority of a political subdivision of the State.
(5)	"Qualified provider" means a person or business experienced in the design, implementation, and installation of energy conservation measures.
(6)	"Request for proposals" means a negotiated procurement initiated by a governmental unit by way of a published notice that includes the following:
a.	The name and address of the governmental unit.
b.	The name, address, title, and telephone number of a contact person in the governmental unit.
c.	Notice indicating that the governmental unit is requesting qualified providers to propose energy conservation measures or water conservation measures through a guaranteed energy savings contract or a guaranteed water savings contract.
d.	The date, time, and place where proposals must be received.
e.	The evaluation criteria for assessing the proposals.
f.	A statement reserving the right of the governmental unit to reject any or all the proposals.
g.	Any other stipulations and clarifications the governmental unit may require.
(7)	"State governmental unit" means the State or a department, an agency, a board, or a commission of the State, including the Board of Governors of The University of North Carolina and its constituent institutions.
(8)	Water Conservation Measure. – A facility alteration, training, or services related to the operation of the facility, when the alteration, training, or services provide anticipated water savings. Water conservation measure includes faucets with automatic or metered shutoff valves, low‑flow toilets, water flow restriction equipment, leak detection equipment, water recycling equipment, waste water recovery systems, cisterns, and other water conservation measures.
(9)	Water Savings. – A measured reduction in water use costs or operating costs created from the implementation of one or more water conservation measures when compared with an established baseline of previous water use costs or operating costs developed by the State Energy Office of the Department of Administration. Water savings includes savings in sewer usage.
"§ 143‑64.17A.  Solicitation of guaranteed energy savings contracts or guaranteed water savings contracts.
(a)	Before entering into a guaranteed energy savings contract or a guaranteed water savings contract, a governmental unit shall issue a request for proposals. Notice of the request shall be published at least 15 days in advance of the time specified for opening of the proposals in at least one newspaper of general circulation in the geographic area for which the local governmental unit is responsible or, in the case of a State governmental unit, in which the facility or facilities are located. No guaranteed energy savings contract and no guaranteed water savings contract shall be awarded by any governmental unit unless at least two proposals have been received from qualified providers. Provided that if after the publication of the notice of the request for proposals, fewer than two proposals have been received from qualified providers, the governmental unit shall again publish notice of the request and if as a result of the second notice, one or more proposals by qualified providers are received, the governmental unit may then open the proposals and select a qualified provider even if only one proposal is received.
(b)	The governmental unit shall evaluate a sealed proposal from any qualified provider. Proposals shall contain estimates of all costs of installation, modification, or remodeling, including costs of design, engineering, installation, maintenance, repairs, debt service, and estimates of energy savings or water savings, whichever applies to the proposal.
(c)	In the case of a local governmental unit, proposals received pursuant to this section shall be opened by a member or an employee of the governing body of the local governmental unit at a public opening at which the contents of the proposals shall be announced and recorded in the minutes of the governing body. Proposals shall be evaluated for the local governmental unit by a licensed architect or engineer on the basis of:
(1)	The information required in subsection (b) of this section; and
(2)	The criteria stated in the request for proposals.
The local governmental unit may require a qualified provider to include in calculating the cost of a proposal for a guaranteed energy savings contract or a guaranteed water savings contract any reasonable fee payable by the local governmental unit for evaluation of the proposal by a licensed architect or professional engineer not employed as a member of the staff of the local governmental unit or the qualified provider.
(c1)	In the case of a State governmental unit, proposals received pursuant to this section shall be opened by a member or an employee of the State governmental unit at a public opening and the contents of the proposals shall be announced at this opening. Proposals shall be evaluated for the State governmental unit by a licensed architect or engineer who is either privately retained, employed with the Department of Administration, or employed as a member of the staff of the State governmental unit. The proposal shall be evaluated on the basis of the information required in subsection (b) of this section and the criteria stated in the request for proposals.
The State governmental unit shall require a qualified provider to include in calculating the cost of a proposal for a guaranteed energy savings contract or a guaranteed water savings contract any reasonable fee payable by the State governmental unit for evaluation of the proposal by a licensed architect or professional engineer not employed as a member of the staff of the State governmental unit or the qualified provider. The Department of Administration may charge the State governmental unit a reasonable fee for the evaluation of the proposal if the Department's services are used for the evaluation and the cost paid by the State governmental unit to the Department of Administration shall be calculated in the cost of the proposal under this subsection.
(d)	The governmental unit shall select the qualified provider that it determines to best meet the needs of the governmental unit by evaluating all of the following:
(1)	Prices offered.
(2)	Proposed costs of construction, financing, maintenance, and training.
(3)	Quality of the products proposed.
(4)	Amount of energy savings or water savings, whichever applies.
(5)	General reputation and performance capabilities of the qualified providers.
(6)	Substantial conformity with the specifications and other conditions set forth in the request for proposals.
(7)	Time specified in the proposals for the performance of the contract.
(8)	Any other factors the governmental unit deems necessary, which factors shall be made a matter of record.
(e)	Nothing in this section shall limit the authority of governmental units as set forth in Article 3D of this Chapter.
"§ 143‑64.17B.  Guaranteed energy savings contracts; guaranteed water savings contracts.
(a)	A governmental unit may enter into a guaranteed energy savings contract or a guaranteed water savings contract with a qualified provider if all of the following apply to the applicable contract:
(1)	The term of the contract does not exceed 12 years from the date of the installation and acceptance by the governmental unit of the  conservation measures provided for under the contract.
(2)	The governmental unit finds that the energy savings or water savings, whichever applies, resulting from the performance of the contract will equal or exceed the total cost of the contract.
(3)	The energy conservation measures or the water conservation measures to be installed under the contract are for an existing building.
(b)	Before entering into a guaranteed energy savings contract or a guaranteed water savings contract, the governmental unit shall provide published notice of the time and place or of the meeting at which it proposes to award the contract, the names of the parties to the proposed contract, and the contract's purpose. The notice must be published at least 15 days before the date of the proposed award or meeting.
(c)	A qualified provider entering into a guaranteed energy savings contract or a guaranteed water savings contract under this Part shall provide security to the governmental unit in the form acceptable to the Office of the State Treasurer and in an amount equal to one hundred percent (100%) of the total cost of the guaranteed energy savings contract or the guaranteed water savings contract, whichever applies, to assure the provider's faithful performance. Any bonds required by this subsection shall be subject to the provisions of Article 3 of Chapter 44A of the General Statutes. If the savings resulting from a guaranteed energy savings contract or a guaranteed water savings contract are not as great as projected under the contract and all required shortfall payments to the governmental unit have not been made, the governmental unit may terminate the contract without incurring any additional obligation to the qualified provider.
(d)	As used in this section, "total cost" shall include, but not be limited to, costs of construction, costs of financing, and costs of maintenance and training during the term of the contract. "Total cost" does not include any obligations on termination of the contract before its expiration, provided that those obligations are disclosed when the contract is executed.
(e)	A guaranteed energy savings contract or a guaranteed water savings contract may not require the governmental unit to purchase a maintenance contract or other maintenance agreement from the qualified provider who installs  conservation measures under the contract if the unit of government takes appropriate action to budget for its own forces or another provider to maintain new systems installed and existing systems affected by the guaranteed energy savings contract or the guaranteed water savings contract.
(f)	In the case of a State governmental unit, a qualified provider shall, when feasible, after the acceptance of the proposal of the qualified provider by the State governmental unit, conduct an investment grade audit. If the results of the audit are not within ten percent (10%) of both the guaranteed savings contained in the proposal and the total proposal amount, either the State governmental unit or the qualified provider may terminate the project without incurring any additional obligation to the other party. However, if the State governmental unit terminates the project after the audit is conducted and the results of the audit are within ten percent (10%) of both the guaranteed savings contained in the proposal and the total proposal amount, the State governmental unit shall reimburse the qualified provider the reasonable cost incurred in conducting the audit, and the results of the audit shall become the property of the State governmental unit.
(g)	In the case of a State governmental unit, a qualified provider shall provide an annual reconciliation statement based upon the results of the measurement and verification review. The statement shall disclose any shortfalls or surplus between guaranteed energy or guaranteed water and operational savings specified in the guaranteed savings contract and actual, not stipulated, energy or water and operational savings incurred during a given guarantee year. The guarantee year shall consist of a 12‑month term commencing from the time that the  conservation measures become fully operational. A qualified provider shall pay the State governmental unit any shortfall in the guaranteed energy or guaranteed water and operational savings after the total year savings have been determined. A surplus in any one year shall not be carried forward or applied to a shortfall in any other year.
"§ 143‑64.17D.  Contract continuance.
A guaranteed energy savings contract or a guaranteed water savings contract may extend beyond the fiscal year in which it becomes effective. Such a contract shall stipulate that it does not constitute a direct or indirect pledge of the taxing power or full faith and credit of any governmental unit.
"§ 143‑64.17E.  Payments under contract.
A local governmental unit may use any funds, whether operating or capital, that are not otherwise restricted by law for the payment of a guaranteed energy savings contract or a guaranteed water savings contract. State appropriations to any local governmental unit shall not be reduced as a result of energy savings or water savings occurring as a result of a guaranteed energy savings contract or a guaranteed water savings contract.
"§ 143‑64.17F.  State agencies to use contracts when feasible; rules; recommendations.
(a)	State governmental units shall evaluate the use of guaranteed energy savings contracts or guaranteed water savings contracts in reducing energy or water costs, whichever applies, and may use those contracts when feasible and practical.
(b)	The Department of Administration, through the State Energy Office, shall adopt rules for: (i) agency evaluation of guaranteed energy savings contracts and guaranteed water savings contracts; (ii) establishing time periods for consideration of guaranteed energy savings contracts and guaranteed water savings contracts by the Office of State Budget and Management, the Office of the State Treasurer, and the Council of State, and (iii) setting measurements and verification criteria, including review, audit, and precertification. Prior to adopting any rules pursuant to this section, the Department shall consult with and obtain approval of those rules from the State Treasurer.
(c)	The Department of Administration, through the State Energy Office, may provide to the Council of State its recommendations concerning any guaranteed energy savings contracts or guaranteed water savings contracts being considered.
"§ 143‑64.17G.  Report on  contracts entered into by local governments.
A local governmental unit that enters into a guaranteed energy savings contract or a guaranteed water savings contract must report the contract and the terms of the contract to the Local Government Commission. The Commission shall compile the information and report it biennially to the Joint Commission on Governmental Operations. In compiling the information, the Local Government Commission shall include information on the energy or water savings expected to be realized from a contract and, with the assistance of the Office of State Construction, shall evaluate whether expected savings have in fact been realized.
"§ 143‑64.17H.  Report on contracts entered into by State governmental units. 
A State governmental unit that enters into a guaranteed energy savings contract or a guaranteed water savings contract must report the contract and the terms of the contract to the State Energy Office of the Department of Administration within 30 days of the date the contract is entered into. In addition, within 60 days after each annual anniversary date of a guaranteed energy savings contract or a guaranteed water savings contract, the State governmental unit must report the status of the contract to the State Energy Office, including any details required by the State Energy Office. The State Energy Office shall compile the information for each fiscal year and report it to the Joint Legislative Commission on Governmental Operations and to the Local Government Commission annually by December 1. In compiling the information, the State Energy Office shall include information on the energy savings or water savings, whichever applies,  expected to be realized from a contract and shall evaluate whether expected savings have in fact been realized.
"§ 143‑64.17I.  Installment and lease purchase contracts.
A local governmental unit may provide for the acquisition, installation, or maintenance of energy conservation measures or water conservation measures acquired pursuant to this Part by installment or lease purchase contracts in accordance with and subject to the provisions of G.S. 160A‑20 and G.S. 160A‑19, as applicable.
"§ 143‑64.17J.  Financing by State governmental units.
State governmental units may finance the acquisition, installation, or maintenance of energy conservation measures or water conservation measures acquired pursuant to this Part in the manner and to the extent set forth in Article 8 of Chapter 142 of the General Statutes or as otherwise authorized by law.
"§ 143‑64.17K.  Inspection and compliance certification for State governmental units.
The provisions of G.S. 143‑341(3) shall not apply to any energy conservation measure or any water conservation measure for State governmental units provided pursuant to this Part, except as specifically set forth in this section. Except as otherwise exempt under G.S. 116‑31.11, the following shall apply to all energy conservation measures or water conservation measures provided to State governmental units pursuant to this Part:
(1)	The provisions of G.S. 133‑1.1.
(2)	Inspection and certification by:
a.	The applicable local building inspector under Part 4 of Article 18 of Chapter 153A of the General Statutes or Part 5 of Article 19 of Chapter 160A of the General Statutes; or
b.	At the election of the State governmental unit, the Department of Administration under G.S. 143‑341(3)d.
The cost of compliance with this section may be included in the cost of the project in accordance with G.S. 143‑64.17A(c1) and may be included in the cost financed under Article 8 of Chapter 142 of the General Statutes."
SECTION 3. The title of Article 8 of Chapter 142 of the General Statutes reads as rewritten: 
"State Energy and Water Conservation Finance Act."
SECTION 4.  G.S. 142‑60 through G.S. 142‑65 read as rewritten: 
"§ 142‑60.  Short title.
This Article is the State Energy and Water Conservation Finance Act.
"§ 142‑61.  Definitions.
The following definitions apply in this Article:
(1)	Certificates of participation. – Certificates or other instruments delivered by a special corporation as provided in this Article evidencing the assignment of proportionate and undivided interests in the rights to receive payments to be made by the State pursuant to one or more financing contracts.
(2)	Cost. – The term includes:
a.	The cost of construction, modification, rehabilitation, renovation, improvement, acquisition, or installation in connection with an energy conservation measure or a water conservation measure.
b.	The cost of engineering, architectural, and other consulting services as may be required, including the cost of performing the technical analysis in accordance with G.S. 143‑64.17A and inspection and certification in accordance with G.S. 143‑64.17K.
c.	Finance charges, reserves for debt service and other types of reserves required pursuant to a financing contract or any other related documentation, and interest prior to and during construction, and, if deemed advisable by the State Treasurer, for a period not exceeding two years after the estimated date of completion of construction.
d.	Administrative expenses and charges.
e.	The cost of bond insurance, investment contracts, credit and liquidity facilities, interest rate swap agreements and other derivative products, financial and legal consultants, and related costs of the incurrence or issuance of the financing contract to the extent and as determined by the State Treasurer.
f.	The cost of reimbursing the State for payments made for any costs described in this subdivision.
g.	Any other costs and expenses necessary or incidental to implementing the purposes of this Article.
(3)	Credit facility. – An agreement that:
a.	Is entered into by the State with a bank, savings and loan association, or other banking institution, an insurance company, reinsurance company, surety company or other insurance institution, a corporation, investment banking firm or other investment institution, or any financial institution or other similar provider of a credit facility, which provider may be located within or without the United States of America; and
b.	Provides for prompt payment of all or any part of the principal or purchase price (whether at maturity, presentment or tender for purchase, redemption, or acceleration), redemption premium, if any, and interest with respect to any financing contract payable on demand or tender by the owner in consideration of the State agreeing to repay the provider of the credit facility in accordance with the terms and provisions of the agreement.
(4)	Energy conservation measure. – Defined in G.S. 143‑64.17.
(5)	Energy conservation property. – Buildings, equipment, or other property with respect to which an energy conservation measure is undertaken.
(6)	Financing contract. – An installment financing contract entered into pursuant to the provisions of this Article to finance the cost of an energy conservation measure or a water conservation measure.
(7)	Person. – An individual, a firm, a partnership, an association, a corporation, a limited liability company, or any other organization or group acting as a unit.
(8)	Special corporation. – A nonprofit corporation created under Chapter 55A of the General Statutes for the purpose of facilitating the incurrence of certificates of participation indebtedness by the State under this Article.
(9)	State governmental unit. – Defined in G.S. 143‑64.17.
(10)	State Treasurer. – The incumbent Treasurer, from time to time, of the State.
(11)	Water conservation measure. – Defined in G.S. 143‑64.17.
(12)	Water conservation property. – Buildings, equipment, or other property with respect to which a water conservation measure is undertaken.
"§ 142‑62: Reserved for future codification purposes.
"§ 142‑63.  Authorization of financing contract.
Subject to the terms and conditions set forth in this Article, a State governmental unit that has solicited a guaranteed energy conservation measure or a guaranteed water conservation measure pursuant to G.S. 143‑64.17A or G.S. 143‑64.17B or the State Treasurer, as designated by the Council of State, is authorized to execute and deliver, for and on behalf of the State of North Carolina, a financing contract to finance the costs of the energy conservation measure or the water conservation measure. The aggregate principal amount payable by the State under financing contracts entered pursuant to this Article shall not exceed seventy‑five million dollars ($75,000,000) at any one time.
"§ 142‑64.  Procedure for incurrence or issuance of financing contract.
(a)	When a State governmental unit has solicited a guaranteed energy conservation measure or a guaranteed water conservation measure, the State governmental unit shall request that the State Treasurer approve the State governmental unit's entering into a financing contract to finance the cost of the conservation measure. In connection with the request, the State governmental unit shall provide to the State Treasurer any information the State Treasurer requests in order to evaluate the request. In the event that the State Treasurer determines that financing efficiencies will be realized through the combining of financing contracts, then the State Treasurer is authorized to execute and deliver, for and on behalf of the State of North Carolina, subject to the terms and conditions set forth in this Article, a financing contract for the purpose of financing the cost of the multiple energy conservation measures or multiple water conservation measures, whichever applies.
(b)	A financing contract may be entered into pursuant to this Article only after all of the following conditions are met:
(1)	The Office of State Budget and Management has certified that resources are expected to be available to the State to pay the payments to fall due under the financing contract as they become due and payable.
(2)	The Council of State has approved the execution and delivery of the financing contract by resolution that sets forth all of the following:
a.	The not‑to‑exceed term or final maturity of the financing contract, which shall be no later than 12 years from the date the financing contract is entered.
b.	The not‑to‑exceed interest rate or rates (or the equivalent thereof), which may be fixed or vary over a period of time, with respect to the financing contract.
c.	The appropriate officers of the State to execute and deliver the financing contract and all other documentation relating to it.
(3)	The State Treasurer has approved the financing contract and all other documentation related to it, including any deed of trust, security agreement, trust agreement or any credit facility.
The resolution of the Council of State shall include any other matters the Council of State considers appropriate.
(c)	In determining whether to approve a financing contract under subdivision (b)(3) of this section, the State Treasurer may consider the factors the State Treasurer considers relevant in order to find and determine all of the following:
(1)	The principal amount to be advanced to the State under the financing contract is adequate and not excessive for the purpose of paying the cost of the energy conservation measure or the water conservation measure, whichever applies.
(2)	The increase, if any, in State revenues necessary to pay the sums to become due under the financing contract are not excessive.
(3)	The financing contract can be entered into on terms desirable to the State.
(4)	In the case of delivery of certificates of participation, the sale of certificates of participation will not have an adverse effect upon any scheduled or proposed sale of obligations of the State or any State agency.
(d)	The Office of State Budget and Management is authorized to certify that funds are expected to be available to the State to make the payments due under a financing contract entered into under the provisions of this section as the payments become due and payable. In so certifying, the Office of State Budget and Management may take into account expected decreases in appropriations to the State governmental unit that will offset payments expected to be made under the financing contract.
"§ 142‑65.  Security; other requirements.
(a)	In order to secure the performance by the State of its obligations under a financing contract or any other related documentation, the State may grant a lien on, or security interest in, all or any part of the energy conservation property or the water conservation property, whichever applies, or the land upon which the energy conservation property or the water conservation property, whichever applies, is or will be located.
(b)	No deficiency judgment may be rendered against the State or any State governmental unit in any action for breach of any obligation contained in a financing contract or any other related documentation, and the taxing power of the State is not and may not be pledged directly or indirectly to secure any moneys due under a financing contract or any other related documentation. In the event that the General Assembly does not appropriate funds sufficient to make payments required under a financing contract or any other related documentation, the net proceeds received from the sale, lease, or other disposition of the property subject to the lien or security interest created pursuant to subsection (a) of this section shall be applied to satisfy these payment obligations in accordance with the deed of trust, security agreement, or other documentation creating the lien or security interest. These net proceeds are hereby appropriated for the purpose of making these payments. Any net proceeds in excess of the amount required to satisfy the obligations of the State under the financing contract or any other related documentation shall be paid to the State Treasurer for deposit to the General Fund of the State.
(c)	Neither a financing contract nor any other related documentation shall contain a nonsubstitution clause that restricts the right of the State to (i) continue to provide a service or conduct an activity or (ii) replace or provide a substitute for any State property that is the subject of a conservation measure.
(d)	A financing contract may include provisions requesting the Governor to submit in the Governor's budget proposal, or any amendments or supplements to it, appropriations necessary to make the payments required under the financing contract.
(e)	A financing contract may contain any provisions for protecting and enforcing the rights and remedies of the person advancing moneys or providing funds under the financing contract that are reasonable and not in violation of law, including covenants setting forth the duties of the State in respect of the purposes to which the funds advanced under a financing contract may be applied, and the duties of the State with respect to the property subject to the lien or security interest created pursuant to subsection (a) of this section, including, without limitation, provisions relating to insuring and maintaining any property and the custody, safeguarding, investment, and application of moneys.
(f)	The interest component of the installment payments to be made under a financing contract may be calculated based upon a fixed or variable interest rate or rates as determined by the State Treasurer.
(g)	If the State Treasurer determines that it is in the best interest of the State, the State may enter into, or arrange for the delivery of, a credit facility to secure payment of the payments due under a financing contract or to secure payment of the purchase price of any certificates of participation delivered as provided in this Article."
SECTION 5.  Part 1 of Article 3B of Chapter 143 of the General Statutes reads as rewritten:
"Part 1. Energy Policy, Water Policy, and Life‑Cycle Cost Analysis.
"§ 143‑64.10.  Findings; policy.
(a)	The General Assembly hereby finds:
(1)	That the State shall take a leadership role in aggressively undertaking energy conservation and water conservation in North Carolina;
(2)	That State facilities have a significant impact on the State's consumption of energy and water;
(3)	That energy and water conservation practices adopted for the design, construction, operation, maintenance, and renovation of these facilities and for the purchase, operation, and maintenance of equipment for these facilities will have a beneficial effect on the State's overall supply of energy and water;
(4)	That the cost of the energy and water consumed by these facilities and the equipment for these facilities over the life of the facilities shall be considered, in addition to the initial cost;
(5)	That the cost of energy and water is significant and facility designs shall take into consideration the total life‑cycle cost, including the initial construction cost, and the cost, over the economic life of the facility, of the energy and water consumed, and of operation and maintenance of the facility as it affects energy and water consumption; and
(6)	That State government shall undertake a program to reduce energy use and reduce water use in State facilities and equipment in those facilities in order to provide its citizens with an example of energy‑use and water‑use efficiency.
(b)	It is the policy of the State of North Carolina to ensure that energy conservation practices and water conservation practices are employed in the design, construction, operation, maintenance, and renovation of State facilities and in the purchase, operation, and maintenance of equipment for State facilities.
"§ 143‑64.11.  Definitions.
For purposes of this Article:
(1)	"Economic life" means the projected or anticipated useful life of a facility.
(2)	"Energy‑consumption analysis" means the evaluation of all energy‑consuming systems and components by demand and type of energy, including the internal energy load imposed on a facility by its occupants, equipment and components, and the external energy load imposed on the facility by climatic conditions.
(2a)	"Energy Office" means the State Energy Office of the Department of Administration.
(2b)	"Energy‑consuming system" includes but is not limited to the following equipment or measures:
a.	Equipment used to heat, cool, or ventilate the facility;
b.	Equipment used to heat water in the facility;
c.	Lighting systems;
d.	On‑site equipment used to generate electricity for the facility;
e.	On‑site equipment that uses the sun, wind, oil, natural gas, liquid propane gas, coal, or electricity as a power source; and
f.	Energy conservation measures in the facility design and construction that decrease the energy requirements of the facility.
(3)	"Facility" means a building or a group of buildings served by a central energy distribution system or components of a central energy distribution system. Facility also means a building or a group of buildings served by a central plumbing or water distribution system or components of a central water distribution system.
(4)	"Initial cost" means the required cost necessary to construct or renovate a facility.
(5)	"Life‑cycle cost analysis" means an analytical technique that considers certain costs of owning, using, and operating a facility over its economic life, including but not limited to:
a.	Initial costs;
b.	System repair and replacement costs;
c.	Maintenance costs;
d.	Operating costs, including energy and water costs; and
e.	Salvage value.
(6)	Repealed by Session Laws 1993, c. 334, s. 3.
(7)	"State agency" means the State of North Carolina or any board, bureau, commission, department, institution, or agency of the State.
(8)	"State‑assisted facility" means a facility constructed or renovated in whole or in part with State funds or with funds guaranteed or insured by a State agency.
(9)	"State facility" means a facility constructed or renovated, by a State agency.(10)	"Water‑consumption analysis" means the evaluation of all water‑consuming systems and components that involve water use, including the internal water use of a facility by its occupants, equipment, and components; sewer usage; and the water use outside of a facility, including water use for landscaping and fountains and the capture or diversion of stormwater.
"§ 143‑64.12.  Authority and duties of State agencies.
(a)	The General Assembly authorizes and directs that State agencies shall carry out the construction and renovation of State facilities, under their jurisdiction in such a manner as to further the policy declared herein, ensuring the use of life‑cycle cost analyses, energy‑conservation practices, and water conservation practices.
(b)	The Department of Administration shall develop and implement policies, procedures, and standards to ensure that State purchasing practices improve energy and water efficiency and take the cost of the product over the economic life of the product into consideration. The Department of Administration shall adopt and implement Building Energy Design Guidelines and Building Water Design Guidelines. These guidelines shall include energy‑use and water‑use goals and standards, economic assumptions for life‑cycle cost analysis, and other criteria on building systems and technologies. The Department of Administration shall modify the design criteria for construction and renovation of facilities to require that a life‑cycle cost analysis be conducted pursuant to G.S. 143‑64.15. The Department of Administration, as part of the Facilities Condition and Assessment Program, shall identify and recommend energy and water conservation maintenance and operating procedures that are designed to reduce energy and water consumption within the facility and that require no significant expenditure of funds. State departments, institutions, or agencies shall implement these recommendations. Where energy management equipment or water management equipment is proposed for State facilities, the maximum interchangeability and compatibility of equipment components shall be required.
The Department of Administration shall develop a comprehensive energy and water management program for State government. Each State agency shall develop and implement an energy management plan and a water management plan that is consistent with the State's comprehensive energy and water management program.
(c)	through (g) Repealed by Session Laws 1993, c. 334, s. 4.
"§ 143‑64.15.  Life‑cycle cost analysis.
(a)	A life‑cycle cost analysis shall include, but not be limited to, all of the following elements:
(1)	The coordination, orientation, and positioning of the facility on its physical site.
(2)	The amount and type of fenestration employed in the facility.
(3)	Thermal characteristics of materials and the amount of insulation incorporated into the facility design.
(4)	The variable occupancy and operating conditions of the facility, including illumination levels.
(5)	Architectural features that affect energy consumption.
(6)	The amount and type of plumbing employed in the facility.
(7)	Architectural features that affect water consumption.
(b)	The life‑cycle cost analysis performed for any State facility shall, in addition to the requirements set forth in subsection (a) of this section, include, but not be limited to, all of the following:
(1)	An energy‑consumption analysis of the facility's energy‑consuming systems in accordance with the provisions of subsection (g) of this section.
(2)	The initial estimated cost of each energy‑consuming system being compared and evaluated.
(3)	The estimated annual operating cost of all utility requirements.
(4)	The estimated annual cost of maintaining each energy‑consuming system.
(5)	The average estimated replacement cost for each system expressed in annual terms for the economic life of the facility.
(6)	A water‑consumption analysis of the facility's water‑consuming systems in accordance with the provisions of subsection (h) of this section.
(7)	The initial estimated cost of each water‑consuming system being compared and evaluated.
(8)	The estimated annual cost of maintaining each water‑consuming system.
(c)	The General Assembly requires each entity to conduct a life‑cycle cost analysis pursuant to this section for the construction or the renovation of any State facility or State‑assisted facility of 20,000 or more gross square feet.
(d)	The life‑cycle cost analysis shall be certified by a registered professional engineer or bear the seal of a North Carolina registered architect, or both. The engineer or architect shall be particularly qualified by training and experience for the type of work involved, but shall not be employed directly or indirectly by a fuel provider, utility company, or group supported by fuel providers or utility funds. Plans and specifications for facilities involving public funds shall be designed in conformance with the provisions of G.S. 133‑1.1.
(e)	In order to protect the integrity of historic buildings, no provision of this Article shall be interpreted to require the implementation of energy‑use or water‑use measures that conflict with respect to any property eligible for, nominated to, or entered on the National Register of Historic Places, pursuant to the National Historic Preservation Act of 1966, P.L. 89‑665; any historic building located within an historic district as provided in Chapters 160A or 153A of the General Statutes; any historic building listed, owned, or under the jurisdiction of an historic properties commission as provided in Chapter 160A or 153A; nor any historic property owned by the State or assisted by the State.
(f)	Each State agency shall use the life‑cycle cost analysis over the economic life of the facility in selecting the optimum system or combination of systems to be incorporated into the design of the facility.
(g)	The energy‑consumption analysis of the operation of energy‑consuming systems in a facility shall include at least all of the following:
(1)	The comparison of two or more system alternatives.
(2)	The simulation or engineering evaluation of each system over the entire range of operation of the facility for a year's operating period.
(3)	The engineering evaluation of the energy consumption of component equipment in each system considering the operation of such components at other than full or rated outputs.
(h)	The water‑consumption analysis of the operation of water‑consuming systems in a facility shall include at least all of the following:
(1)	The comparison of two or more system alternatives.
(2)	The simulation or engineering evaluation of each system over the entire range of operation of the facility for a year's operating period.
(3)	The engineering evaluation of the water consumption of component equipment in each system considering the operation of such components at other than full or rated outputs.
"§ 143‑64.15A.  Certification of life‑cycle cost analysis.
All State agencies under the jurisdiction of the Department of Administration performing a life‑cycle cost analysis for the purpose of constructing or renovating any State facility shall, prior to selecting a design option or advertising for bids for construction, submit the life‑cycle cost analysis to the Department for certification. The Department shall review the material submitted by the State agency, reserve the right to require agencies to complete additional analysis to comply with certification, perform any additional analysis, as necessary, to comply with G.S. 143‑341(11), and require that all construction or renovation conducted by the State agency comply with the certification issued by the Department.
"§ 143‑64.16.  Application of Part.
The provisions of this Part shall not apply to municipalities or counties, nor to any agency or department of any municipality or county; provided, however, this Part shall apply to any board of a community college. Community college is defined in G.S. 115D‑2(2)."
SECTION 6.  G.S. 115C‑47 is amended by adding a new subdivision to read:
"(28b)	To Enter Guaranteed Water Savings Contracts for Water Conservation Measures. – Local boards may purchase water conservation measures by guaranteed water savings contracts pursuant to Part 2 of Article 3B of Chapter 143 of the General Statutes."
SECTION 7.  G.S. 133‑4.1 reads as rewritten:
"§ 133‑4.1.  Guaranteed energy savings contracts; guaranteed water savings contracts.
Except for G.S. 133‑1 and [G.S.] 133‑1.1, the provisions of this Article shall not apply to energy conservation measures undertaken as part of a guaranteed energy savings contract or to water conservation measures undertaken as part of a guaranteed water savings contract, entered into pursuant to the provisions of Part 2 of Article 3B of Chapter 143 of the General Statutes."
SECTION 8.  G.S. 143‑120(e) is amended by adding a new subdivision to read:
"(12)	Guaranteed water savings contracts, which are governed by Article 3B of Chapter 143 of the General Statutes."
SECTION 9.  G.S. 143‑129.4 reads as rewritten:
"§ 143‑129.4.  Guaranteed energy savings contracts; guaranteed water savings contracts.
The solicitation and evaluation of proposals for guaranteed energy savings contracts and guaranteed water savings contracts, as defined in Part 2 of Article 3B of this Chapter, and the letting of contracts for these proposals are not governed by this Article but instead are governed by the provisions of that Part; except that guaranteed energy savings contracts and guaranteed water savings contracts are subject to the requirements of G.S. 143‑128.2 and G.S. 143‑135.3."
SECTION 10.  G.S. 160A‑20(h) is amended by adding two new subdivisions as follows:
"(6c)	Any other local school administrative unit, but only for the purpose of financing water conservation measures acquired pursuant to Part 2 of Article 3B of Chapter 143 of the General Statutes.
(6d)	A community college, but only for the purpose of financing water conservation measures acquired pursuant to Part 2 of Article 3B of Chapter 143 of the General Statutes."
SECTION 11.  This act becomes effective July 1, 2004, and applies to contracts entered into on or after that date.