No. ( 1980 )

Lee White Executive Director Department of Administration 1525 Sherman Street, 7th Floor Denver, Colorado 80203

Dear Mr. White:

This letter is written in response to your memorandum dated November 21, 1979, in which you requested a legal opinion concerning the financing of energy conservation improvements to certain higher education facilities. Your memorandum states that the Department of Administration is considering possible sources of financing other than appropriated moneys to pay for energy conservation retrofit projects.

QUESTION PRESENTED AND CONCLUSION

You have asked whether C.R.S. 1973, 23-5-102, 103, 104 and 105 authorize governing boards of state educational institutions to finance energy conservation retrofit projects involving auxiliary facilities through issuance of tax-exempt revenue bonds.

It is my opinion that the statutes you have cited do authorize the governing boards of state educational institutions to finance the projects you have described by tax-exempt revenue bonds, if the income from those auxiliary facilities is not otherwise pledged.

ANALYSIS

The projects under consideration are described by you as energy conservation retrofit projects capable of amortization over 5 years. They include boiler modifications, insulation efforts, electrical timers and other physical modifications of the facility that would reduce energy consumption and save future operating expenses for those facilities. The facilities in which you are interested are auxiliary facilities at state educational institutions, such as dormitories, dining facilities and recreational facilities, which were financed by tax-exempt revenue bonds.

C.R.S. 1973, 23-5-102 authorizes the governing boards of state educational institutions to borrow funds for "constructing, otherwise acquiring and equipping" auxiliary facilities for the use of students and employees at any state educational institution (emphasis added). C.R.S. 1973, 23-5-103 further authorizes the governing boards to pledge the net income derived from such auxiliary facilities as security for repayment of moneys borrowed for the purposes authorized by section 23-5-102. Advancement of moneys for such purposes may be evidenced by bonds which are exempt from taxation by the state and its political subdivisions. C.R.S. 1973, 23-5-103(2), 23-5-105.

The improvements which you propose to make are properly considered "equipping" auxiliary facilities, and therefore fall within the lawful purposes for which tax-exempt bonds may be issued. In the absence of a statutory definition, a useful definition of the word "equip" is found in Black's LawDictionary (4th ed. 1968) as follows:

To furnish for service or against a need or exigency; to fit out; to supply with whatever is necessary to efficient action in any way. Synonymous with furnish.

This definition encompasses the energy conservation retrofit projects which you have proposed.

Before undertaking to finance a specific project, however, it will be necessary to examine any existing bond resolutions to determine the extent to which the net income from the particular auxiliary facility is already pledged for other purposes. Each of the auxiliary facilities in question was probably constructed with financing obtained through issuance of tax-exempt bonds, and the net income of those facilities may already be pledged to repayment of existing bond obligations. Existing bond resolutions should be examined to determine whether they permit net income to be used for improvement projects such as you propose.

SUMMARY

It is therefore my opinion that C.R.S. 1973, 23-5-102, 103, 104 and 105 authorize governing boards of state educational institutions to finance energy conservation retrofit projects at auxiliary facilities by tax-exempt revenue bonds if the net income from those auxiliary facilities is not otherwise pledged. If you have additional questions concerning this matter, please do not hesitate to contact this office.

Very truly yours,

J.D. MacFARLANE Attorney General

EDUCATION, HIGHER EDUCATIONAL INSTITUTIONS IMPROVEMENTS SECURITIES STATE DEBTS REVENUE BONDS

C.R.S. 1973, 23-5-102 C.R.S. 1973, 23-5-103 C.R.S. 1973, 23-5-104 C.R.S. 1973, 23-5-105

ADMINISTRATION, DEPT. OF Administration EDUCATION, DEPT. OF HIGHER EDUCATION, DEPT. OF

The governing boards of state educational institutions are authorized to finance energy conservation retrofit projects at auxiliary facilities by tax-exempt revenue bonds if the net income from those auxiliary facilities is not otherwise pledged.