By April Davila.
Imagine a school district wants to replace an aging air conditioning system and install double-paned windows to keep their students more comfortable while dramatically lowering their energy bill. These retrofits could improve student performance, and save the school district hundreds of thousands of dollars, but the initial investment is simply too costly for the for the district to foot the bill.
Next door, the city council is considering a proposal to retrofit twelve of its city-owned facilities with LED lighting. The upgrades would reduce energy consumption and lower the city’s utility bill, but the cost has drawn the discussion to a stand still at council meetings.
All across the state of California, energy retrofit projects like these are hitting the wall of “how do we pay for it?” The projects are too small to catch the attention of the big financial banks, and too big for the local community banks.
Enter Lance Holman, President and CEO of Holman Capital and a pioneer in the world of financial engineering. “Our strategy is to create a new market of investors for local, municipal projects,” said Lance Holman. “By keeping the money in the community to fund municipal energy efficiency projects, everyone benefits.”
Prior to creating Holman Capital, Mr. Holman worked for SunTrust Equipment Finance & Leasing Corp. and Chase Equipment Finance originating and structuring tax-exempt lease and debt obligations for public agencies. He began his career financing capital equipment, aircraft, real property, technology, infrastructure, and building efficiency transactions with a broad range of borrowers and investors.
Then, roughly five years ago, Mr. Holman recognized the tremendous opportunity that existed in facilitating financing for local projects. Utilizing his 20 years of experience in product development, capital deployment, and institutional investments, Holman saw the pieces that needed to come together: cities, energy service companies, and local banks.
By engaging local banks as investors, Holman Capital facilitates projects that previously fell through the cracks.
Then, using the funds brought together by Holman Capital, cities are able to hire energy service companies to execute Energy Conservation Measures (ECM’s) that quickly yield remarkable savings of up to 30%.
Recently, Holman Capital has partnered with the energy solutions provider Climatec Energy Solutions, to execute just these kinds of projects. Holman Capital packages the financial transaction, the cities hire Climatec to overhaul their facilities, and the money saved by the city is used to repay the investors. Once repayment is made, Holman Capital’s work is done, and the city continues to enjoy their energy savings, seeing a dramatic boost to their general fund. The work is guaranteed by Climatec, to ensure that the city sees the expected savings, not only to finance the project, but for continued savings for years, even decades, down the road.
Just such a project was recently executed by Holman in the town of Hesperia, California. When the board of the Hesperia Unified School District approved a contract with Holman Capital it gained access to the $13 million it needed to replace aging HVAC systems, replace and retrofit lighting, install new energy management systems and more. Climatec Energy Solutions will execute the upgrade on the facilities, guaranteeing the energy savings that will not only pay for the project, but also save the district an additional $2 million in the first five years. Those are funds that can go toward paying teachers and buying textbooks.
“It just makes sense,” said Holman. “It gives our clients portfolio diversification, new customers, new income streams, new products, and it keeps their investments local. They can actually see the good that their investments are doing.”
Lance Holman will be speaking on a panel at the MuniGrid conference coming up on June 26 at the California Science Center, discussing the specifics of how financial engineering is shaping the world of municipal investment. For more information, visit http://munigrid.org/