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CIT discusses potential agreement with Piper Jaffray to finance Retrofit One project

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The Chicago Infrastructure Trust Board of Directors on Wednesday discussed plans to hire Piper Jaffray as the placement agent for the Retrofit One energy savings project. In that role, the company would help finance $27.5 million in energy efficiency upgrades of city buildings.

CIT began the search for a financing partner for the Retrofit One projects in January, when it first issued a request for qualifications for financial partners. The organization issued a request for proposals in August and made two addendums to the request in the subsequent months. The initial group of 13 bidders was eventually narrowed to four following the final addendum to the RFP, and Piper Jaffray was selected from the final group.

Piper Jaffray's proposal calls for the project to be funded using “financial instruments backed by both an Energy Performance Contract (i.e. savings guarantee) combined with an ESA (Energy Savings Agreement), which together form a consistent annuity stream for financiers,” according to CIT documents presented at Wednesday’s meeting. Under the proposed financing plans, creditors are paid using savings resulting from the implementation of energy, operations and maintenance upgrades. Consequently, creditor’s claims are only on the particular revenues and savings associated with the project and are treated as “off credit” by ratings agencies.

Board member David Hoffman expressed some concern that the full terms of the agreement had not been made available to the CIT Board. CIT CEO Steve Beitler noted that the agreement was to be drafted following the meeting, prompting board Chairman James Bell to ask that the board be given an opportunity to “see the terms and conditions” of the deal “before it goes to the [City] Council.”

CIT Board members plan to introduce an ordinance related to the agreement with Piper Jaffray on Nov. 13 and, pending City Council approval, to close the deal on Dec. 19.