Orrick, Herrington & Sutcliffe LLP
09/03/2024 | Press release | Distributed by Public on 09/03/2024 07:48
The Largest Energy as a Service Health Care Transaction in U.S. History: Adventist Health and Bernhard Enter Into 30 Year Lease and Concession
Adventist Health, a faith-based nonprofit health system across the West Coast and Hawaii, has entered into a 30-year energy-as-a-service concession and lease with Bernhard.
Orrick advised Adventist and served as bond counsel. The project involves a $457 million tax-exempt project financing and investment in energy-related infrastructure systemwide.
Bernhard will support Adventist as a long-term developer to optimally and most efficiently operate and maintain the new and existing energy assets, including renewable energy assets and central utility plants.
The guaranteed utility cost savings as a result of the improvements are structured to offset the design, construction, financing and operations and maintenance costs for the project. This tax-exempt financing structure was novel in that it used a special purpose not-for-profit entity formed by the broader Adventist organization to support this transaction. It also included multiple bond issuers to finance improvements in three different states.
THE COMPANIES
Adventist Health is a faith-based, nonprofit, integrated health system serving more than 100 communities on the West Coast and Hawaii with over 440 sites of care, including 28 acute care facilities. Founded on Adventist heritage and values, Adventist Health provides care in hospitals, clinics, home care and hospice agencies in rural and urban communities.
Bernhard is an energy infrastructure firm headquartered in New Orleans, La. Founded in 1919, Bernhard's core services span the U.S. and include engineering, fabrication, construction, asset management, and energy-as-a-service for customers in health care, higher education, hospitality, industrial, and other market segments. Bernhard has over 2,200 full-time employees in more than 20 U.S. offices.
THE IMPACT
The transaction with Bernhard is highlighted by an approximately 20% guaranteed reduction in Adventist Health's annual utility spend, significant advancements in the system's decarbonization efforts and a material increase in reliability and resiliency across the network.
"Partnering with Bernhard aligns perfectly with our mission to inspire health, wholeness, and hope," said John Beaman, Chief Financial Officer, Adventist Health. "The significant cost savings and environmental benefits we will realize through this initiative allow us to reinvest in our core mission-focused initiatives, ultimately enhancing the care we provide to our communities."
"This framework is a revolutionary solution to the healthcare industry that provides benefits in energy cost savings, reduced carbon emissions and improved resiliency of our infrastructure to support patient care and support future strategic growth," said Brandon Seibold, Senior Finance Officer and Treasurer, Adventist Health.
The partnership with Bernhard will facilitate significant enhancements to Adventist Health's sustainability efforts systemwide. Adventist Health's location in Glendale, Calif., for example, will see a 61.1% reduction in purchased electricity and a 63.7% reduction in Scope 2 greenhouse gas emissions.
THE TEAM
Matthew Neuringer, Robyn Helmlinger, Jenna Magan, Chas Cardall and Rich Moore led the Orrick team members who worked on the deal. Other team members included Young Lee, Henry McKenzie, Marlowe Mitchell, Robert Newell, Joshua Bonney, Nicole Walsh and Lorraine McGowen.