Facility Conservation Improvement Program (FCIP)

Facility Conservation Improvement Program (FCIP) Project Financing

State Agencies:

Using master-lease purchasing authority, the Department of Administration secures an equipment lease purchase agreement with a private financing institution. Equipment leases are available to all State Agencies for conservation improvement projects.

A lease purchase is a contract between parties allowing for the rental of equipment and/or real property. The Lessee agrees to make semi-annual payments of principal and interest.

These energy savings leases are structured as tax-exempt in order to benefit public agencies. The interest paid by the Lessee is exempt from federal and Kansas income tax. The tax savings experienced by the Lessor is passed on to the Lessee in the form of interest rates that can be as much as 3-5 percentage points lower than taxable commercial leases.

Our leases are structured as fixed-rate capital leases. At the end of the lease term, you pay the Lessor $1 to buy the equipment outright. Typically, the length of a lease is from ten to fifteen years, based primarily on the simple payback of the improvements being implemented but, by statute may be extended up to 20 years. Project sizes start at $ 50,000.

Security for the lease financing typically consists only of a first lien on the related project. Covenants are minimal and not burdensome. Documents are standardized and easy to read.

Larger projects (over $5,000,000) may be financed through a bond issue. A financial analysis is performed to determine the best financing method.

Municipalities, Counties and Schools:

Financing an Energy Service Performance Contract for municipalities, counties and schools is similar to financing state ESPC’s; an equipment lease-purchase agreement is secured with a private financing institution to fund the project. However for other than state agencies, the Kansas Development Finance Authority (KDFA) will act on behalf of the Lessee to secure and manage the financing in lieu of the Kansas Department of Administration. Another difference is that now the ESCO can bid out and arrainge an equipment lease-purchase agreement with a private financing institution for a project. An ESCO may even elect to include the financing as a part of their energy service performance contract, further streamlining the process. Please contact to discuss financing options.