Update to the MSBA's Third Party Funding Policy, Replaces Project Advisory 16 from November 2011
The purpose of this Advisory is to summarize the MSBA's policy on third party funding. This policy applies to all new capital pipeline program projects and is based, in part, on a recommendation from the State Auditor regarding sources of project income in its report dated August 23, 2004. This update changes the treatment of Clean Energy Incentive rebates, funded in whole or in part, by monies that were directly or indirectly paid by Massachusetts' customers to providers and will impact projects that submit their final ProPay reimbursement request on or after July 1, 2018.
Third party funding includes insurance settlements, rebates, grants from other public entities or other parties, private donations, and other sources of project income. Per MSBA policy, third party funding is an ineligible cost.
|Types of Third Party Funding||Ineligible||Eligible|
|Grants from public entities or other parties||x|
As a result, both the MSBA and the District share in the savings that may result from third party funding. Subject to the one (1) Exception listed below, the third party funding reduces the MSBA’s and District's share of the Project proportionally as illustrated in the first two columns of the following example:
Third Party Funding Example
|No Third Party Funding||Impact of Third Party Funding||Impact of Third Party Funding of $250,000 and a $50,000 Clean Energy Incentive Rebate|
|Total Project Costs||$1,000,000||$1,000,000||$1,000,000|
|Third Party Funding||($0)||($300,000)||($250,000)1|
|MSBA Final Total Facilities Grant3||$500,000||$350,000||$375,000|
|District's Share of the Project||$500,000||$350,000||$375,000|
Districts are required to disclose all sources of funding, including utility rebates and third party funding, in the MSBA Sources and Uses Form, which is required as part of the close-out audit. If a utility rebate exceeded the amount of the District's Share of the Project, the incremental portion would be considered third party funding, and would be deemed ineligible. Districts must submit a pre-approval letter from the utility regarding the rebate along with a copy of the check from the utility company to the District.
1 A Clean Energy Incentive Rebate will not constitute Third Party Funding if the Rebate was funded, in whole or in part, by monies that were directly or indirectly paid by Massachusetts' customers to providers.
2 There are no scope exclusions or other ineligible costs in these examples.
3 Note that the third party funding reduces both the MSBA's and District's share of the Project proportionally.