Pilot program; establish for community and junior college facilities performance contracting.

S. B. No. 2607 *SS08/R1251* ~ OFFICIAL ~ G1/2
26/SS08/R1251
PAGE 1 (aa\kr)

To: Universities and
Colleges
MISSISSIPPI LEGISLATURE REGULAR SESSION 2026

By: Senator(s) England

SENATE BILL NO. 2607

AN ACT TO AMEND SECTION 31-7-14, MISSISSIPPI CODE OF 1972, TO 1
ESTABLISH A PILOT PROGRAM AUTHORIZING THE USE OF PERFORMANCE-BASED 2
CONTRACTS TO IMPROVE, OPERATE AND MAINTAIN PUBLIC FACILITIES ON 3
COMMUNITY AND JUNIOR COLLEGE CAMPUSES; TO PROVIDE THAT THE PROGRAM 4
SHALL OPERATE FOR NO MORE THAN SEVEN YEARS, SUBJECT TO EXTENSION 5
OR EXPANSION BY THE LEGISLATURE; TO DEFINE "FACILITIES PERFORMANCE 6
CONTRACT"; TO EXPAND THE DEFINITION OF "SAVINGS"; TO WAIVE THE 7
PAYBACK PERIOD LIMITATION; TO PROVIDE THAT A FACILITIES 8
PERFORMANCE CONTRACT UNDER THIS ACT MAY INCLUDE LONG-TERM 9
OPERATION, MAINTENANCE, REPAIR, REPLACEMENT AND MANAGEMENT 10
SERVICES; TO REQUIRE CERTAIN PROVISIONS IN EACH CONTRACT UNDER 11
THIS ACT; TO PROVIDE FOR PROCUREMENT; TO CREATE REPORTING 12
REQUIREMENTS; AND FOR RELATED PURPOSES. 13
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI: 14
SECTION 1. Section 31-7-14, Mississippi Code of 1972, is 15
amended as follows: 16
31-7-14. (1) (a) For purposes of this section, the 17
following words and phrases shall have the meaning ascribed 18
herein, unless the context clearly indicates otherwise: 19
(i) "Division" means the Energy Division of the 20
Mississippi Development Authority. 21
(ii) "Energy services" or "energy efficient 22
services" means energy efficiency equipment, services relating to 23
S. B. No. 2607 *SS08/R1251* ~ OFFICIAL ~
26/SS08/R1251
PAGE 2 (aa\kr)

the installation, operation and maintenance of equipment and 24
improvements reasonably required to existing or new equipment and 25
existing or new improvements and facilities including, but not 26
limited to, heating, ventilation and air-conditioning systems, 27
lighting, windows, insulation and energy management controls, life 28
safety measures that provide long-term operating-cost reductions, 29
building operation programs that reduce operating costs, 30
alternative fuel motor vehicles including vehicles that have been 31
converted to such and ancillary equipment related to or associated 32
with the fueling of alternative fuel motor vehicles, or other 33
energy-conservation-related improvements, including improvements 34
or equipment related to renewable energy, water and other natural 35
resources conservation, including accuracy and measurement of 36
water distribution and/or consumption, and other equipment, 37
services and improvements providing verifiable cost savings. 38
(iii) "Energy services provider" means a person or 39
business with a successful record of documented energy savings 40
projects that is experienced in the design, implementation and 41
installation of energy conservation measures; has the technical 42
capabilities to verify that such measures generate energy and 43
operational cost savings or enhanced revenues; has the ability to 44
guarantee the savings; has the ability to secure or arrange the 45
financing necessary to support the implementation of the energy 46
conservation measures; and is approved by the division. 47
S. B. No. 2607 *SS08/R1251* ~ OFFICIAL ~
26/SS08/R1251
PAGE 3 (aa\kr)

Approval by the division of an energy services provider shall 48
be granted in a prequalification process. 49
Such energy services providers may petition the division to 50
review their qualifications and deem them to be qualified for 51
inclusion on a prequalification list if they meet the 52
qualifications set forth by the division. 53
Any energy services project that has been competitively bid 54
and awarded prior to any change in law shall be allowed to 55
continue under the laws current at the time the project was 56
awarded. 57
The division shall ensure that small businesses are not 58
disadvantaged in the determination of a qualified energy services 59
provider. 60
(iv) "Entity" means the board of trustees of any 61
public school district, junior college, institution of higher 62
learning, publicly owned hospital, state agency or governmental 63
authority under this chapter. 64
(v) "Energy services contract" means an agreement 65
to provide energy services which include, but are not limited to, 66
the design, installation, financing and maintenance or management 67
of the energy systems or equipment in order to improve its energy 68
efficiency. Payments for the contract are not contingent upon the 69
actual savings realized from the equipment. 70
(vi) "Energy performance contract" means an 71
agreement to provide energy services which includes, but is not 72
S. B. No. 2607 *SS08/R1251* ~ OFFICIAL ~
26/SS08/R1251
PAGE 4 (aa\kr)

limited to, the design, installation, financing and maintenance or 73
management of the energy systems or equipment in order to improve 74
its energy efficiency. 75
(vii) "Shared-savings contract" means an agreement 76
where the contractor and the entity each receive a preagreed 77
percentage or dollar value of the energy cost savings over the 78
life of the contract. 79
(viii) "Reduce operating costs" means elimination 80
of future expenses or avoidance of future replacement expenditures 81
as a result of new equipment installed or services performed. 82
Material savings, labor savings, cancelled maintenance contracts, 83
et cetera, shall be considered as being viable to reduce operating 84
costs. Reduce operating costs may be included in the performance 85
contract or energy services agreement solely at the discretion of 86
the entity. A contract that otherwise satisfies the requirements 87
of this section shall satisfy the requirements allowing use of an 88
energy performance, energy services or shared-savings contract 89
even if the sole expense being eliminated is maintenance expense. 90
(ix) "Capital cost avoidance" means planned 91
capital improvement expenditures that will be avoided through 92
implementation of the energy services project. Capital cost 93
avoidance may be included in an energy services contract or an 94
energy performance contract solely at the discretion of the 95
entity. Capital cost avoidance may be claimed as an annual 96
avoidance or as a one-time avoidance in a specific year of the 97
S. B. No. 2607 *SS08/R1251* ~ OFFICIAL ~
26/SS08/R1251
PAGE 5 (aa\kr)

contract term, depending upon the nature of the avoided capital 98
cost. 99
(x) "Alternative fuel motor vehicle" means a motor 100
vehicle propelled by alternative fuel either as a dedicated 101
alternative fuel vehicle, as a bi-fuel vehicle using alternative 102
fuel as one of its fuels, or as a dual fuel vehicle using 103
alternative fuel as one of its fuels. 104
(xi) "Energy conservation measure" means the 105
individual items or components of a large energy services or 106
energy efficient services program. 107
(xii) "Simple payback period" means the amount of 108
time for the recuperation of the initial investment. The simple 109
payback period is calculated by dividing the initial investment by 110
the annual savings. The simple payback period for any contract 111
shall not exceed twenty (20) years. The simple payback period of 112
an individual energy conservation measure shall not be considered 113
in any evaluation provided the simple payback period for the 114
contract does not exceed twenty (20) years. 115
(b) An entity may, using any sources of funding 116
available to the entity, enter into an energy services contract, 117
energy performance contract, shared-savings contract, any of which 118
may contain a lease, or lease-purchase contract for energy 119
efficiency equipment, services relating to the installation, 120
operation and maintenance of equipment or improvements reasonably 121
required to existing or new equipment and existing or new 122
S. B. No. 2607 *SS08/R1251* ~ OFFICIAL ~
26/SS08/R1251
PAGE 6 (aa\kr)

improvements and facilities and shall contract in accordance with 123
the following provisions: 124
(i) The division may assemble a list of 125
prequalified energy services providers. The division shall use 126
objective criteria in the selection process. The criteria for 127
evaluation shall include, but shall not be limited to, the 128
following factors: to assess the capability of the qualified 129
energy services provider in the area of design engineering, 130
installation, maintenance and repairs associated with energy 131
services or guaranteed energy performance contracts; 132
qualifications including engineering depth and experience, 133
post-installation project monitoring, data collection, and 134
verification of and reporting of savings; overall project 135
experience and qualifications; management capability; ability to 136
access long-term sources of project financing; financial health 137
and stability, litigation history with customers and other factors 138
determined by the division to be relevant and appropriate and 139
related to the ability to perform the project. The division shall 140
either accept or reject an application for prequalification from 141
an energy services provider within sixty (60) days after receipt. 142
If the division fails to act within sixty (60) days from the date 143
of receiving an application, then the application shall 144
automatically be accepted and the energy services provider shall 145
be added to the prequalified list. 146
S. B. No. 2607 *SS08/R1251* ~ OFFICIAL ~
26/SS08/R1251
PAGE 7 (aa\kr)

(ii) An entity shall publicly issue requests for 147
proposals, advertised in the same manner as provided in Section 148
31-7-13 for seeking competitive sealed bids, concerning the 149
provision of energy efficiency services relating to the 150
installation, operation and maintenance of equipment, improvements 151
reasonably required to existing or new equipment and existing or 152
new improvements and facilities or the design, installation, 153
ownership, operation and maintenance of energy efficiency 154
equipment. Those requests for proposals shall contain terms and 155
conditions relating to submission of proposals, evaluation and 156
selection of proposals, financial terms, legal responsibilities, 157
and any other matters as the entity determines to be appropriate 158
for inclusion. 159
(iii) Upon receiving responses to the request for 160
proposals, the entity may select the most qualified proposal or 161
proposals on the basis of experience and qualifications of the 162
proposers, the technical approach, the financial arrangements, the 163
overall benefits to the entity and any other relevant factors 164
determined to be appropriate. 165
(iv) An entity shall negotiate and enter into 166
contracts with the person, persons, firm or firms submitting the 167
proposal selected as the most qualified under this section. 168
(v) The annual rate of interest paid under any 169
lease-purchase agreement authorized by this section shall not 170
S. B. No. 2607 *SS08/R1251* ~ OFFICIAL ~
26/SS08/R1251
PAGE 8 (aa\kr)

exceed the maximum interest rate to maturity on general obligation 171
indebtedness permitted under Section 75-17-101. 172
(vi) The maximum lease-purchase term for any 173
equipment acquired under this section shall not exceed the lesser 174
of twenty (20) years or the average useful life of the energy 175
conservation measures from the date the energy conservation 176
measures have been completed and accepted by the governmental 177
unit. 178
(vii) This subsection shall, with respect to the 179
procurement of energy efficiency services and/or equipment, 180
supersede any contradictory or conflicting provisions of Chapter 181
7, Title 31, Mississippi Code of 1972, and other laws with respect 182
to awarding public contracts. 183
(2) (a) The division may contract with a party selected 184
under this subsection to provide financing to entities and private 185
"nonprofit" hospitals, to purchase energy efficiency equipment, 186
services relating to the installation, operation and maintenance 187
of equipment or improvements reasonably required to existing or 188
new equipment and existing or new improvements and facilities or 189
an energy saving performance contract, energy services contract, 190
or lease-purchase basis. Any energy efficiency lease financing 191
contract entered into by the division before May 15, 1992, shall 192
be valid and binding when the contract was entered into under this 193
subsection. 194
S. B. No. 2607 *SS08/R1251* ~ OFFICIAL ~
26/SS08/R1251
PAGE 9 (aa\kr)

(b) The entities and private "nonprofit" hospitals that 195
decide to contract for energy efficiency equipment, services 196
relating to the installation, operation and maintenance of 197
equipment or improvements reasonably required to existing or new 198
equipment and existing or new improvements and facilities on a 199
lease, energy services contract or lease-purchase basis, may 200
request financial assistance from the division. 201
(c) The provisions of any energy efficiency 202
lease-purchase agreements authorized under this subsection (2) 203
shall comply with the requirements of subsection (1)(b)(v) of this 204
section. The term of any lease or lease-purchase agreement for 205
energy efficiency services and/or equipment entered into under 206
this section shall not exceed twenty (20) years, commencing on the 207
completion of the installation of equipment or improvements under 208
the contract. 209
(d) Any entity or private "nonprofit" hospital having 210
approval of the division may borrow money in anticipation of 211
entering into a lease-purchase agreement pursuant to subsection 212
(2)(b) of this section. Any borrowing may be upon terms and 213
conditions as may be agreed upon by the borrowing entity and the 214
party advancing interim funds; however, the principal on any 215
borrowing shall be repaid within a period of time not to exceed 216
one hundred eighty (180) days. In borrowing money under this 217
paragraph (d), it is not necessary to publish notice of intention 218
to do so or to secure the consent of the qualified electors, 219
S. B. No. 2607 *SS08/R1251* ~ OFFICIAL ~
26/SS08/R1251
PAGE 10 (aa\kr)

either by election or otherwise. Any borrowing may be negotiated 220
between the parties and is not required to be publicly bid, may be 221
evidenced by negotiable notes or lease and shall not be considered 222
when computing any limitation of indebtedness of the borrowing 223
entity established by law. The principal, interest and costs of 224
incurring any borrowing shall not exceed the principal amount of 225
the final contract or agreement approved by the division, and 226
accepted by the borrowing entity, under subsection (2)(b) of this 227
section. 228
(e) This subsection (2) shall, with respect to the 229
procurement of energy efficiency services and/or equipment, 230
supersede the provisions of any contradictory or conflicting 231
provisions of Chapter 7, Title 31, Mississippi Code of 1972, and 232
other laws with respect to awarding public contracts. 233
(3) All lease-purchase agreements authorized by this section 234
and the income from those agreements shall be exempt from all 235
taxation within the State of Mississippi, except gift, transfer 236
and inheritance taxes. 237
(4) (a) An entity may contract for energy efficiency 238
equipment services relating to the installation, operation or 239
maintenance of equipment or improvements reasonably required to 240
existing or new equipment and existing or new improvements and 241
facilities on a shared-savings basis or performance basis. 242
(b) If an entity decides to enter into a contract for 243
energy efficiency equipment, services relating to the 244
S. B. No. 2607 *SS08/R1251* ~ OFFICIAL ~
26/SS08/R1251
PAGE 11 (aa\kr)

installation, operation or maintenance of equipment or 245
improvements reasonably required to existing or new equipment and 246
existing or new improvements and facilities on a shared-savings 247
basis or performance basis, the entity shall issue a request for 248
proposals or a request for qualifications, as determined necessary 249
by the division, in the same manner as prescribed under subsection 250
(1)(b) of this section. The entity shall notify the division in 251
writing of its intention to issue a request for proposals or a 252
request for qualifications. 253
(c) The terms of any shared-savings contract, energy 254
services contract, or energy performance contract entered into 255
under this section may not exceed twenty (20) years, commencing on 256
the completion of the installation of equipment or improvements 257
under the contract. 258
(d) The terms of any shared-savings or energy 259
performance contract entered into under this section must contain 260
a guarantee of savings clause from the company providing energy 261
efficiency equipment services relating to the installation, 262
operation and maintenance of equipment or improvements reasonably 263
required to existing or new equipment and existing or new 264
improvements and facilities. 265
(5) (a) By March 1 and September 1 of each year, each 266
entity that enters into an energy performance contract or 267
shared-savings contract shall report to the division its energy 268
S. B. No. 2607 *SS08/R1251* ~ OFFICIAL ~
26/SS08/R1251
PAGE 12 (aa\kr)

usage by meter in dollars and consumption by fuel type for the 269
previous six-month period determined by the division. 270
(b) The division shall remove qualified status of an 271
energy services provider that fails to meet the reporting 272
requirements of paragraph (a) of this subsection after two (2) 273
such violations. 274
(c) Any costs associated with the reporting made under 275
this subsection (5) shall be paid by the energy services provider. 276
(6) The contract may be construed to provide flexibility to 277
public agencies in structuring agreements entered into hereunder 278
so that economic benefits may be maximized. 279
(7) (a) The Legislature finds that Mississippi's community 280
and junior colleges face significant deferred maintenance, aging 281
infrastructure and limited capital resources. It is the intent of 282
this subsection to authorize a limited pilot program allowing the 283
use of performance-based contracting to improve, operate and 284
maintain public facilities through guaranteed cost savings and 285
avoided capital expenditures. 286
(b) There is established within the Mississippi 287
Community College Board a pilot program permitting the board to 288
authorize community and junior colleges to enter into facilities 289
performance contracts pursuant to this subsection. The program 290
shall operate for no more than seven (7) years from the effective 291
date of this act, subject to extension or expansion by the 292
S. B. No. 2607 *SS08/R1251* ~ OFFICIAL ~
26/SS08/R1251
PAGE 13 (aa\kr)

Legislature. Contracts executed prior to expiration shall remain 293
valid for their full term. 294
(c) For the purposes of this subsection, a "facilities 295
performance contract" means an agreement with a qualified provider 296
under which the provider designs, finances, installs, operates, 297
maintains, repairs, replaces or manages one or more facility 298
systems or infrastructure improvements, and guarantees cost 299
savings sufficient to pay all or a portion of the contract costs 300
over the term of the agreement. 301
(d) For contracts entered into under this subsection, 302
"cost savings" may include, but shall not be limited to: 303
(i) Energy and utility cost savings; 304
(ii) Operational and maintenance savings; 305
(iii) Avoided or deferred capital expenditures; 306
(iv) Reduced lifecycle costs; 307
(v) Avoided emergency repairs or equipment 308
failures; and 309
(vi) Other measurable and verifiable cost 310
reductions approved by the governing board. 311
(e) The requirement in this section that a performance 312
contract achieve a simple payback within twenty (20) years shall 313
not apply to facilities performance contracts executed pursuant to 314
this subsection (7). Contract terms may extend for a period not 315
to exceed the useful life of the improvements or services 316
provided, as determined by the governing board. 317
S. B. No. 2607 *SS08/R1251* ~ OFFICIAL ~
26/SS08/R1251
PAGE 14 (aa\kr)

(f) A facilities performance contract under this 318
subsection may include long-term operation, maintenance, repair, 319
replacement and management services, provided that such services 320
are directly related to achieving the guaranteed savings and 321
performance outcomes. 322
(g) Each facilities performance contract shall include: 323
(i) A written guarantee of cost savings from the 324
provider; 325
(ii) An annual reconciliation of guaranteed 326
savings versus actual savings; and 327
(iii) Measurement and verification procedures 328
consistent with industry standards. 329
(h) Contracts under this subsection may be procured 330
using a qualifications-based or best-value selection process as 331
determined by each community and junior college, and these 332
contracts shall not be subject to competitive bidding requirements 333
applicable to construction contracts. 334
(i) No later than June 30 each year, each participating 335
community college shall submit an annual report to the Mississippi 336
Community College Board and the Legislature detailing: 337
(i) Contract scope and term; 338
(ii) Guaranteed versus realized savings; 339
(iii) Capital expenditures avoided; and 340
(iv) Facility condition outcomes. 341
( * * *8) This section shall stand repealed on July 1, 2028. 342
S. B. No. 2607 *SS08/R1251* ~ OFFICIAL ~
26/SS08/R1251
PAGE 15 (aa\kr)
ST: Pilot program; establish for community and
junior college facilities performance
contracting.
SECTION 2. This act shall take effect and be in force from 343
and after July 1, 2026. 344