EPC Public Sector Case Studies City of Marquette, Michigan ü Multi-measure project including security/life safety ü Innovative tax-exempt lease

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1 EPC Public Sector Case Studies City of Marquette, Michigan ü Multi-measure project including security/life safety ü Innovative tax-exempt lease financing model Hawai i Department of Transportation ü Multi-measure project including renewables ü Municipal obligation bond financing ü Largest U.S. single-state EPC project

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3 Performance Contracting Project Overview

4 City of Marquette Goals and Challenges The City s mission statement: The City of Marquette is dedicated to providing a superior quality of life through professional municipal services. Project aligns with the City of Marquette s mission statement and addresses the following challenges: ü Aging Infrastructure ü High Energy Costs ü Insufficient Capital Funds for Necessary Upgrades ü City did not want to negatively impact its bond capacity by funding program with traditional bonds ü Operational Risk (Equipment Failure) ü Deferred Maintenance ü Desire to Reduce Energy Usage ü Continuous Improvement

5 Scope of Work Highlights Updating 22 traffic intersections throughout the city Replacing over 3,300 new water meters and installing a Smart City Itron AMI system on all 6,100 meters Complete renovation of the upper floor of City Hall to provide more user friendly, customer service for local community Installing LED lights on 2,498 street lights Installing LED lights on 125 bike path lights Electrical co-generation plant at the waste water treatment plant Numerous building envelope, lighting and HVAC improvements City wide security and IT upgrades Fire Alarm Upgrades Complete Lakeview Arena ice system replacement Implement a City wide service agreement to support City operational staff for life of program

6 Program Outcomes Self Funded Solutions - $27 million in improvements paid for through savings Guaranteed Outcomes - $42 million in benefits over the term through Guaranteed Savings (37% reduction in energy usage) Transfer of Liability - Reduced Risk Through Guarantees on Fixed Cost and Performance Turnkey Approach - Single Point of Accountability Alternative Financing Approach Financed project using New Tax Exempt Lease Purchase Legislation Operational Integrity Replacing Aging Equipment Prior to Major Failure Local Economic Impact 70% of project executed by local companies!

7 Tax Exempt Municipal Lease (TELP) Not Debt - A Lease Purchase Agreement issued under this subsection shall not be subject to the Revised Municipal Finance Act, 2001 PA 34, MCL to and shall not be a municipal security or a DEBT as those terms are defined in that act Flexible - The legislative body may make payments under a lease purchase agreement from any legally available funds or from a combination of energy or operational savings, capital contributions, future replacement costs avoided or billable revenue enhancements that result from energy conservation improvements Ownership - During the term of the lease purchase agreement, the legislative body shall be the vested owner of the energy conservation improvements and may grant a security interest in the energy conservation improvements to the provider of the lease purchase agreement

8 Overall Benefits to the City of Marquette Project aligns with the City of Marquette s mission statement by directly impacting the following City objectives for Employee Development and Public Service: ü Plan for our future while preserving our past Self funding project with guaranteed outcomes ü Change with the challenges New Fiscally Responsible Financial Mechanism ü Provide a safe, healthy environment Becoming a Smart City by addressing infrastructure while maintaining budget integrity ü Create a sense of community Improved reliability of City services, and City investments in local subcontractors through the project ü Recognize the accomplishments of employees and community members Provide public relations to promote program outcomes ü Provide opportunities for personal and community growth Training programs for staff, and local job creation. This project includes 78,585 hours of local labor at prevailing wages, equating to 37 full time jobs over two years ü Provide leadership for the community Leadership in Sustainability

9 Hawai i Department of Transportation The largest single-state ESPC in the United States 9 Johnson Controls Inc.

10 The Hawai i Challenge Hawaiian Islands are the most remote islands in the world 90+% of electricity is generated via fossil fuel State is committed to renewable technology and sustainability Hawaii has the highest $5.1B leaves Hawaii Governor Ige s goal is utility rates in the nation Each island has its own generation capacity and electrical grid There is no interconnection of grids between islands 10 Johnson Controls Inc. economy annually for fuel costs alone Renewable Energy and Sustainability is key to keeping these dollars at home 100% renewable by 2045 State committed to Performance Contracting as an important tool towards achieving this goal

11 Airports Harbors Highways Preserving Paradise 12 Hawaii DOT airports 9 Commercial Harbors 1,500 miles of State Roadways on Oahu & Maui 98,000 lighting fixtures upgraded to LED 24,400 solar photovoltaic panels Air conditioning upgrades Deferred maintenance items 11 Johnson Controls Inc.

12 First Year Energy Savings = $25M 12 Johnson Controls Inc.

13 7,962 8 MW $27.3M jobs local created renewable energy in tax revenues 100% Sustainable Hawai i $186.6M renewable by in income to households 49% $710M $865M reduction in energy Guaranteed savings economic development Johnson Controls Inc.

14 Thank you!