ShareThisRALEIGH, N.C. - North Carolina's cash-strapped public universities, state government agencies and several local governments are turning to an unusual way to pay for energy-saving building renovations: not paying.
At least not up front. They're using an increasingly popular approach called "performance contracting," in which upgrades to heating, cooling and lighting systems are paid for over time by the lower utility bills they create. The improvements are so efficient that they're expected to more than pay for themselves over the period of the agreements, typically 20 years or less.
Such contracts have been completed at the North Carolina Museum of Art, a state administration complex in Raleigh and at the University of North Carolina-Greensboro.
The tactic is becoming particularly popular at universities, in part because years of state budget cuts have left them with a backlog of more than $2 billion in facilities maintenance. Work is now under way on three performance-contracting jobs at universities, and at least 10 more are planned.
All told, more than $200 million of these contracts are signed or in the works, most by universities. More than a dozen school systems and several community colleges around the state have used the approach since 2003, as well as a handful of local governments.
And now, at least six more community colleges, nine school systems and 25 local governments are pursuing the idea, said Seth Effron, a spokesman for the North Carolina State Energy Office.
Two of the biggest university projects, totaling nearly $80 million, are under way at North Carolina State University.
In the first, the university is getting $20 million in improvements to 13 buildings totaling 1.6 million square feet. Schneider Electric is installing digital control systems for heating, cooling and lighting, major mechanical systems and upgraded light fixtures. And it is weatherproofing the buildings.
The upshot, said Kevin MacNaughton, associate vice chancellor for facilities, is that the university is able to make crucial upgrades it otherwise could not afford.
A confluence of situations has made the time ripe for these unusual arrangements. Among them are tight state budgets; a backlog of maintenance needs; advances in technology that allow the new systems to generate such big savings compared to current equipment; and high energy prices.
While the benefits may seem obvious, it has taken a while for performance contracting to catch on. One reason, say experts, is that the financial part of the deal is so different from what contracting officials with governments and universities were used to.
More than half a dozen other universities in the state system have signed or plan to sign such deals.
Reach Jay Price at jay.price(at)newsobserver.com. For more stories visit scrippsnews.com
Must credit The News and Observer of Raleigh, N.C.
