DSU, Amir Mohammadi Recognized for Financing Innovation

– The sustainability efforts and financial creativity of DSU and Dr. Amir Mohammadi, its executive vice president and University treasurer, were recently recognized by Obama Administration’s Better Building Challenge.

Dr. Amir Mohammadi

 

During the May 7-9 Better Building Challenge Summit in Washington, D.C., DSU was among seven entities recognized for “Sharing Innovative Solutions” to achieve energy reductions.

 

Specifically, DSU was recognized for coming up with an innovative way of mobilizing capital – the brainchild of Dr. Mohammadi – to finance energy upgrades on campus that will save the University millions of dollars in energy cost over the next 20 years.

 

In order to achieve its sustainability goals of reducing its energy consumption through energy technology upgrades, DSU had to first overcome the strict debt capacity limits. To accomplish that, r. Mohammadi developed a novel “on balance sheet, off-debt capacity approach, in which the University obtained permission from the state of Delaware to utilize previously restricted appropriations to create a revenue-neutral debt structure.

 

That enabled the University to access large-scale bond financing to support energy efficiency upgrades on campus. DSU worked with a variety of Delaware stakeholders – including the Office of the Governor, the State Senate Finance Committee, the Bond Council, State Office of Management and Budget, the state Department of Natural Resource and Environmental Control, the state’s Sustainable Energy Utility, as well as a number of financial advisors and external auditors – to make the new approach a practical reality.

 

As the result of this “on balance sheet, off-debt capacity” approach, DSU was able to obtain bond financing totaling $19.3 million, which paid for energy efficiency work. The energy upgrades has been validated by a Guaranteed Energy Saving Agreement (GESA) with Johnson Controls, the company that won the contract for the work. The agreement ensures that the University will realize the long-term energy savings as a result of the upgrades.

 

As a result of the GESA, DSU will experience at total of $24.6 million in savings over 20 years, with a net savings of $5.3 million as well as a 26% reduction in greenhouse gases.

 

According to the U.S. Department of Energy website, “DSU has pioneered a unique financing approach for state universities” that will enable to overcome similar debt capacity limitation challenges that are prevalent throughout the country for other institutions.

 

Dr. Mohammadi noted that without the novel financial approach, the university would not have obtained the necessary bond financing for the GESA energy upgrade work.

 

“The implementation of this approach was made possible by Delaware Gov. Jack Markell and by State Sen. Harris B. McDowell III, who both through their leadership and support made this financing solution a reality,” Dr. Mohammadi said.

 

DSU shared the “Innovative Solutions” spotlight with six other honorees – the Cleveland Clinic Foundation, the City of El Paso (Texas), the City of Gillette (Wy.), HEI Hotels & Resorts, Saint-Gobain Corp., and TIAA-CREF (Teachers Insurance and Annuity Association – College Retirement Equities Fund).

 

The Better Business Challenge is a national leadership initiative launched by President Barack Obama in 2011 with the goal of making American commercial and industrial buildings 20 percent more energy efficient by 2020. Beginning with about 60 university, corporate, community and industrial partners, DSU was one of the invited 10 higher education partners when the initiative was launched, and the only HBCU (Historically Black Colleges and Universities) that was included.