Senate committee considers $20 million package (oral change) to back low‑interest loans for school HVAC and geothermal projects

Sen. John Jeong presented Senate File 17 87 to the committee, proposing that the Minnesota Clean Infrastructure Financing Authority (MNCIFA, sometimes referred to as the state green bank) establish a revolving loan fund to help K‑12 schools finance HVAC modernization and geothermal installations.

“Many schools across the state struggle with outdated HVAC systems, leading to poor indoor air quality and rising energy costs,” Kari Groth Swan, executive director of MNCIFA, told the committee. She said the agency would coordinate low‑interest financing, leverage federal tax‑credit direct pay provisions and crowd in private capital to create a revolving pool that could be reused as tax credits are received.

Testimony supporting the bill described multiple benefits. Dr. Justin Killian of Education Minnesota said improved indoor air quality and temperature control can help academic performance and teacher retention. Lucas Franco of LiUNA (local 455) cited the Pipefitters’ geothermal installation in St. Paul as a model and said geothermal systems can produce large, recurring operational savings; he testified to an 85% reduction in cooling costs at a training center.

Manufacturers and installers described system performance and payback expectations: Darcy Solutions said typical geothermal projects show 25–50% lower heating energy use and 20–30% lower cooling energy use with paybacks often in the 5–10 year range; Flow Environmental Systems described CO2‑based heat pumps and hydronic systems that can improve operational efficiency and longevity.

Committee members focused on financing mechanics and scale. MNCIFA staff said projects would be structured as low‑interest, “patient capital” loans tied to direct‑pay tax credits; loans can be repaid when tax credits are direct-paid to the applicant, often 12–24 months after project completion, and MNCIFA’s early loans had 10‑year T‑bill‑linked rates in the 4.3–4.6% range.

Senator Jeong offered an oral amendment placing $10,000,000 into two blanked line items in the bill; counsel described the oral amendment as inserting $10,000,000 on page 2, line 9 and $10,000,000 on page 2, line 13. The committee adopted both the A1 amendment and the oral amendment.

Members pressed for additional data on why districts would choose the green‑bank loan over traditional district financing and requested more detail on program capacity, pipeline and how MNCIFA would leverage federal loan‑program office support. Kari Groth Swan said MNCIFA has pipeline estimates and plans to use federal loan programs to scale while preserving revolving capital for additional projects.

The committee laid the bill over for possible inclusion.