                                                                        THIRD DIVISION
                                                                        December 24, 2008

No. 1-08-1258


THE PEOPLE ex rel. THE BOARD OF TRUSTEES                   )     Appeal from
OF CHICAGO STATE UNIVERSITY,                               )     the Circuit Court
                                                           )     of Cook County.
                Plaintiff-Appellant,                       )
                                                           )
       v.                                                  )
                                                           )
SIEMENS BUILDING TECHNOLOGIES, INC.,                       )
a Delaware Corporation,                                    )
                                                           )
                Defendant-Appellee                         )
                                                           )
                                                           )
(Siemens Financial Services, Inc.                          )
f/k/a Siemens Credit Corporation,                          )     No. 03 CH 13221
a Delaware Corporation, MBIA Capital Corporation           )
1999-B T ax Exempt Grantor T rust,                         )
a Delaware Corporation,                                    )
                                                           )
                Defendants and Third-Party Plaintiffs-     )
                Appellees;                                 )
                                                           )
                                                           )
Chapman and Cutler, LLP and                                )
David G. Williams,                                         )
                                                           )
                Third-Party Defendants and                 )
                Third-Party Plaintiffs-Appellees;          )
                                                           )
                                                           )
Nancy Kaye Hall-Walker,                                    )     Honorable
                                                           )     Peter A. Flynn
                Third Party Defendant).                    )     Judge Presiding.




       JUSTICE THEIS delivered the opinion of the court:

       This case appears before us on an interlocutory appeal pursuant to Supreme Court Rule
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308 (155 Ill. 2d R. 308) to consider three questions certified by the circuit court regarding the

interpretation of the Public University Energy Conservation Act (the Act) (110 ILCS 62/1 et seq.

(West 1998)). The People of the State of Illinois originally brought this action on behalf of the

Board of Trustees of Chicago State University (the Board) against defendants, Siemens Building

Technologies, Inc. (Siemens), Siemens Financial Services, Inc., f/k/a Siemens Credit Corporation

(Siemens Financial), and MBIA Capital Corporation 1999-B Tax-Exempt Grantor Trust (MBIA)

for declaratory relief, rescission, and breach of contract related to two agreements the Board

entered into with defendants for the installation, purchase, and financing of certain energy

conservation measures at the Chicago State University (the University) purportedly designed to

provide guaranteed energy and operational cost savings.

       In its fourth-amended complaint, the State alleged, inter alia, that the “Performance

Services Agreement” the Board entered into with Siemens violated the energy savings guarantee

under the Act and that Siemens breached various provisions in the Agreement relating to that

guarantee. The State sought restitution, rescission and damages arising from the alleged shortfall

in energy savings to the University. The circuit court ultimately dismissed several counts of the

fourth-amended complaint, finding that the guarantee could not be properly evaluated until the

end of the 10-year contract term. The court also dismissed certain counts relating to the

enforceability of the “Master Lease Agreement” the Board originally entered into with Siemens

Financial, holding that the Act did not prohibit the financing of the environmental conservation

measures by a third-party lender or prohibit an unconditional payment provision in the lease.

Subsequently, the court certified three questions for interlocutory appeal pursuant to Supreme


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Court Rule 308. 155 Ill. 2d R. 308.

               1.      “Can a university, under the ‘annual’ language of [the Act] §35, sue

       for reimbursement of a savings shortfall before the end of the [10]1-year guarantee

       period specified in [the Act] §20?”

               2.      “Does [the] 2007 amendment to [the Act]§25 merely clarify the

       language of §25, or does it effect a substantive change? If it effects a substantive

       change, is the change retroactive?”

               3.      “(a) Do[es] [the Act] §§5-15, 5-20, 15, 20, and 35 prevent the use

       of ‘hell or high water’ financing provisions under which the university must pay a

       lessor/financier for energy conservation measures even if the measures do not

       produce a savings to the university? [and] (b) Does the 2007 amendment to [the

       Act] §25 (see Question 2 supra) affect the answer to this question? If so, in what

       way?”

       For the following reasons, we answer the first certified question by holding that the Act

does not require an annual reimbursement of a shortfall, but the parties are not prohibited from

contracting for greater protections. We need not answer the second certified question because we

find the original intent of the statute can be discerned from the original legislative enactment. We



       1
          The question is framed in terms of a 20-year guarantee period because the Act was
amended in 2006 by Public Act 94-1062, which amended section 20 to extend the time period
from 10 to 20 years. Pub. Act 94-1062, eff. July 31, 2006 (amending 110 ILCS 62/20 (West
2006)). However, because the guaranteed energy savings contract in the present case was
entered into prior to the amendment, we consider the preamended version of section 20 as it
applies to this case.

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answer the first part of the third certified question in the negative, ruling that the Act does not

prohibit the use of “hell or high water” financing clauses.

 BACKGROUND

       In March 1999, the Board entered into a 10-year “Performance Services Agreement” (the

Agreement) with Siemens under which Siemens was to install various energy conservation

measures for the University to reduce energy consumption and increase energy efficiency at the

University. The parties agreed that this Agreement constituted a “guaranteed energy savings

contract” as contemplated by the Act (110 ILCS 62/5-15 (West 1998)) and that Siemens was a

“qualified provider” of these energy services and measures as that term is defined by the Act (110

ILCS 62/5-20 (West 1998)).

       Pursuant to section 2 of the Agreement, Siemens guaranteed that the energy and

operational cost savings generated over the ten-year term would be equal to or greater than the

total cost incurred by the University to complete the project. The total cost of the energy

conservation measures was approximately $6 million. The Board additionally agreed to pay

approximately $2 million for a maintenance program. Siemens guaranteed that the University

would realize a total of at least $10 million from energy, operational and capital savings.

       Under subsection 2.2 of the Agreement, the parties set forth an accounting mechanism

utilized to track the savings over the term of the Agreement. The amount of guaranteed annual

savings was projected for each year of the contract term. At the end of each year, Siemens was

responsible for documenting whether there was an excess in savings or a savings shortfall for each

annual period based on its annual projections. If there were excess savings in any annual period,


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Siemens would apply those savings toward the total guaranteed savings projected in the contract.

However, if the actual annual energy savings fell short of the projected guaranteed savings for

that year, the Board had two options: (1) carry over the shortfall into the next year and increase

the savings guarantee amount for the next year; or (2) Siemens would pay the shortfall in the form

of a credit toward the maintenance program.

       In order to finance the purchase of these measures, in June 1999, the Board entered into a

“Master Lease Agreement” (the Lease) with Siemens Financial. Under the Lease, the University

borrowed over $6.2 million to purchase the energy conservation measures from Siemens and

agreed to repay the loan by making annual payments to Siemens Financial of about $816,000

through 2009. The parties have given us little insight into the relationship between Siemens and

Siemens Financial. However, under the Lease, the University holds title to the equipment

purchased from Siemens and Siemens Financial holds a security interest in that equipment. The

Lease also contains an unconditional rental payment clause the parties refer to as a “hell or high

water clause” under which the Board’s obligation to make the lease payments is unconditional,

notwithstanding any breach of the Agreement by Siemens. As part of the execution of this Lease,

Chapman and Cutler provided an opinion letter on behalf of the University presumably expressing

the University’s authorization to enter into the Lease. This letter does not appear in the record on

appeal. Siemens Financial eventually assigned its rights in the Lease to another entity who, in

turn, assigned its rights to MBIA.

       Subsequently, in 2003, a dispute arose relating to the performance guarantee under the

Agreement. The Board claimed that certain equipment it had purchased was not functioning


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properly and claimed an energy savings shortfall of $3 million less than projected through the first

four years of the Agreement. Based upon these claims, the Board stopped making payments

under the Agreement in 2003. The State ultimately filed suit on behalf of the Board against

Siemens Financial and MBIA. In its fourth-amended complaint, the State alleged, inter alia, that

the performance guarantee in the Agreement violated sections 20 and 35 of the Act because the

Act mandated that the “qualified provider” reimburse the University for energy savings shortfalls

on an annual basis. Additionally, the State alleged that, in the alternative, the University had not

realized the guaranteed energy savings projected under the Agreement. It sought, in part,

reimbursement of the shortfall between projected annual savings and actual annual savings.

       With respect to the financing, the State alleged, inter alia, that the Board was not

authorized under the Act to enter into the Lease it executed because Siemens Financial and MBIA

were not “qualified providers,” and the unconditional rental payment clause was now void and

illegal. The State argued the clause contravened the purpose of the Act because it required

unconditional payment to the lessor regardless of whether the energy conservation measures

produced the requisite savings to the University. It sought to recover all of the payments the

University had made under the Lease.2 The circuit court dismissed these claims, holding that the

Act contemplated third-party financing from a lender other than a “qualified provider” and that


       2
           Subsequently, Siemens Financial and MBIA filed a third-party claim against Chapman

and Cutler based on their reliance on the opinion letter. Chapman and Cutler, in turn, brought a

contribution action against the University’s general counsel, Nancy Kaye Hall-Walker, for her role

in structuring and approving the Agreement and Lease.

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the unconditional payment clause in the lease was not prohibited by the Act. We granted

defendants’ petition for leave to appeal.

ANALYSIS

Standard of Review

       Our scope of review is governed by Supreme Court Rule 308(a). 155 Ill. 2d R. 308(a).

Rule 308 provides an avenue of permissive appeal for interlocutory orders where the trial court

has deemed that they involve a question of law as to which there is substantial ground for

difference of opinion and where an immediate appeal from the order may materially advance the

ultimate termination of the litigation. 155 Ill. 2d R. 308(a). We are generally limited to the

questions certified by the trial court, which, because they must be questions of law and not fact,

are reviewed de novo. Townsend v. Sears, Roebuck & Co., 227 Ill. 2d 147, 153, 879 N.E.2d

893, 897 (2007).

       With these principles in mind, we address defendants’ arguments that it is improper for the

court to consider the first certified question under Rule 308 because (1) the State has not

established an injury in fact, namely, that there indeed exists any energy shortfall; and (2) the

Agreement provides for the remedy it seeks, namely, annual reimbursement of any shortfall.

       We recognize that if a question certified by the trial court calls for a hypothetical answer

with no practical effect, this court should refrain from answering it. Lawndale Restoration Ltd.

Partnership v. Acordia of Illinois, Inc., 367 Ill. App. 3d 24, 27, 853 N.E.2d 791, 794 (2006).

However, the State’s underlying allegation, seeking a declaratory judgment that the Agreement is

void and illegal, squarely implicates the interpretation of sections 35 and 20 of the Act relating to


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reimbursement of energy savings shortfalls. For purposes of this appeal, we take the factual

allegations as true (735 ILCS 5/2-619 (West 2006)), and note that the circuit court’s dismissal of

these counts was based, at least in part, on its interpretation of these statutory provisions.

Accordingly, we consider the merits of the certified questions.

The Public University Energy Conservation Act

        In order to better understand the certified questions before us, we begin with a brief

overview of the Act as a whole. Initially, we note that the Act has never previously been subject

to judicial interpretation and, therefore, this case presents a case of first impression. 3 The Act was

enacted in 1997 by Public Act 90-486 (Pub. Act 90-486, eff. Aug. 17, 1997) to encourage and

facilitate energy conservation and efficiency at public universities at no net cost to the university.

110 ILCS 62/1 et seq. (West 1998)4; see generally, D. Smith & J. Ferber, Performance

Contracting with State and Local Governments, 25 Pub. Cont. L.J. 393, 394-95 (1996) (noting

that energy savings contracts are considerably valuable to public entities because they allow the


        3
            We also note that numerous other states and the federal government have similar types

of legislation regarding guaranteed energy savings contracts and to our knowledge there has been

no published judicial authority with regard to similar legislation in any other jurisdiction. Thus,

we write on a clean slate.
        4
            The Act mirrors three other similar statutes applying to local governments (50 ILCS

515/1 et seq. (West 1994)); public school districts (105 ILCS 5/19b-1 et seq. (West 1994)); and

community colleges (110 ILCS 805/5A-5 et seq. (West 1994)). None of these statutes have been

subject to judicial interpretation.

                                                   8
1-08-1258

entity to “use future energy savings to finance the cost” of conservation measures).

       Under the Act, the Board is empowered to enter into a multiyear “guaranteed energy

savings contract” (110 ILCS 62/5-15 (West 1998)) with a “qualified provider” (110 ILCS 62/5-

20 (West 1998)) for the implementation of various “energy conservation measure[s]” (110 ILCS

62/5-10 (West 1998)) designed to reduce energy consumption and/or operating costs at the

University. Pursuant to the guarantee provisions set forth in section 20 of the Act, the qualified

provider must guarantee in writing that the actual energy and/or operational cost savings resulting

from the implementation of these measures will meet or exceed the cost of implementing these

measures within 10 years. 110 ILCS 62/20 (West 1998). The qualified provider must reimburse

the university for any shortfall of guaranteed energy savings projected in the contract and must

provide a sufficient bond to the university for the installation and performance of all of the energy

conservation measures included in the contract. 110 ILCS 62/20 (West 1998).

Question One

               “Can a university, under the “annual” language of [the Act] §35, sue for

       reimbursement of a savings shortfall before the end of the [10]-year guarantee

       period specified in [the Act] §20?”

       The principles guiding our review are familiar. The fundamental rule of statutory

construction is to ascertain and give effect to the legislature's intent. DeLuna v. Burciaga, 223 Ill.

2d 49, 59, 857 N.E.2d 229, 236 (2006). The language of the statute is the best indication of

legislative intent, and we give that language its plain and ordinary meaning. Ready v.

United/Goedeke Services, Inc., No. 103474, slip op. at 5 (November 25, 2008). In determining


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the plain meaning of a statute's terms, we consider the statute in its entirety, keeping in mind the

subject it addresses, and the apparent intent of the legislature in enacting the statute. Ready, slip

op. at 5. We may not depart from the plain language of the statute by reading into it exceptions,

limitations, or conditions that conflict with the express legislative intent. Town & Country

Utilities, Inc. v. Illinois Pollution Control Board, 225 Ill. 2d 103, 117, 866 N.E.2d 227, 235

(2007). “[A] court should not attempt to read a statute other than in the manner in which it was

written.” Ultsch v. Illinois Municipal Retirement Fund, 226 Ill. 2d 169, 190, 874 N.E.2d 1, 13

(2007).

          The State contends that under the plain language of sections 35 and 20, a qualified

provider must reimburse a university for energy savings shortfalls annually. Conversely, Siemens

maintains that under the plain language of the guarantee, any savings shortfalls cannot be realized

until the end of the contract term. We begin by examining the language of each section. At the

time of the parties’ Agreement, section 20 provided in pertinent part as follows:

                   “The guaranteed energy savings contract shall include a written guarantee

          of the qualified provider that either the energy or operational cost savings, or both,

          will meet or exceed within 10 years the costs of the energy conservation measures.

          The qualified provider shall reimburse the public university for any shortfall of

          guaranteed energy savings projected in the contract. A qualified provider shall

          provide a sufficient bond to the public university for the installation and the faithful

          performance of all the measures included in the contract.” 110 ILCS 62/20 (West

          1998).


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Based on the plain reading of the first sentence of section 20, the legislature intended to provide a

guarantee to protect contracting public universities from incurring net costs for pursuing energy

conservation measures and to provide energy and operational cost savings over the 10-year term

of the contract. Thus, under the guarantee, the ultimate risk is allocated to the provider to

establish that, at the end of the contract term, the energy and/or operational savings generated

over the term of the contract will equal or exceed the cost of the energy conservation measures.

       This construction of the first sentence is confirmed by section 15 of the Act (110 ILCS

62/15 (West 1998)) relating to the power of the Board to award a guaranteed energy savings

contract to a qualified provider. That section provides that the Board is empowered to enter into

this type of contract if it finds that “the amount it would spend on the energy conservation

measures * * * would not exceed the amount to be saved in either energy or operational costs or

both within a 10 year period from the date of installation.” 110 ILCS 62/15 (West 1998).

       The next sentence of section 20 refers specifically to the obligation of the provider to

“reimburse the public university for any shortfall of guaranteed energy savings projected in the

contract.” 110 ILCS 62/20 (West 1998). It does not expressly indicate when the reimbursement

is to occur. The State maintains that section 35 explains that the reimbursement is to be made on

an annual basis.

       Section 35 provides as follows:

               “The public university shall document the operational and energy cost

       savings specified in the guaranteed energy savings contract and designate and

       reserve that amount for an annual payment of the contract. If the annual energy


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        savings are less than projected under the guaranteed energy savings contract the

        qualified provider shall pay the difference as provided in Section 20.” 110 ILCS

        62/35 (West 1998).

By its express language, the legislature intended that we construe sections 20 and 35 together. In

doing so, the circuit court ruled as follows:

        “Section 35 of the Act does call for keeping track of annual energy savings, but

        does not require payment (or netting out) except ‘as provided in Section 20.’ But

        [section] 20 contains a ten-year guarantee, not an annual guarantee. Thus, under

        [Section] 20 the provider guarantees that over ten years the energy savings will

        equal or exceed the conservation costs; and the provider must pay the shortfall if

        that guarantee is not met – which cannot be known until the ten years have

        elapsed. It follows that a university may incur interim excess costs during the ten-

        year period without triggering an immediate or annual reimbursement

        obligation.”(Emphasis in original).

The State takes issue with this interpretation, asserting that the first sentence of section 20 is

merely a “maximum payback period” and that section 35 must be understood in light of only the

second sentence in section 20. However, Siemens maintains that the State’s construction would

eviscerate the language of the first sentence in section 20 and read into the second sentence of

section 20 an “annual” reimbursement obligation where that language is not expressly mandated.

        We are mindful that all provisions of a statutory enactment must be read as a whole.

DeLuna, 223 Ill. 2d at 60, 857 N.E.2d at 236. We must not read each sentence in isolation but,


                                                  12
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rather, interpret each sentence in light of other relevant provisions in the statute. Alternate Fuels,

Inc. v. Director of the Illinois Environmental Protection Agency, 215 Ill. 2d 219, 238, 830 N.E.2d

444, 455 (2004). When section 35 and 20 are read together, the interpretation that comports with

the “guarantee” is that “any shortfall” will be reimbursed at the end of the contract term rather

than on an annual basis, because performance under the guarantee is not determined until the end

of the contract term. Thus, Siemens’ conception that there may be savings in some years and

excesses in others, that the savings are reconciled under section 35 annually, and that any

shortfalls is reimbursed, if necessary, at the end of the contract, comports with the overall

guarantee expressed in section 20.

       Nevertheless, the State maintains that requiring a university to wait until the end of a 10 or

now 20-year contract term to seek reimbursement for any shortfall would violate several other

provisions of the Act. It specifically directs our attention to section 5-15. 110 ILCS 62/5-15

(West 1998). Section 5-15 provides in pertinent part that a guaranteed energy savings contract

“shall provide that all payments *** are to be made over time and the savings are guaranteed to

the extent necessary to pay the costs of the energy conservation measures.” 110 ILCS 62/5-15

(West 1998).

       The State contends that this section means that the energy savings in any given year must

be guaranteed to correspond to the amount needed to make “annual payments” under the

contract, thereby allowing the University to not only leverage the savings, but, where there is a

shortfall, apply a reimbursement to the next fiscal year’s payment of the contract. Nevertheless,

this construction would require us to add the word “annual” into the definition of a guaranteed


                                                  13
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energy savings contract in section 5-15 and the guarantee provisions in section 20 even though

that language is not included. It is not within our power to do so. Madison Two Associates v.

Pappas, 227 Ill. 2d 474, 495, 884 N.E.2d 142, 156 (2008). Had the legislature intended that

annual energy savings must correspond to annual payments, it could have explicitly so provided as

other states have indeed done. See, e.g, Fla. Stat. Ann. §489.145(5)(b) (West 2006) (“the annual

savings are guaranteed to the extent necessary to make annual payments”); Colo. Rev. Stat. Ann.

§29-12.5-101(3)(e) (West 2006) (“[i]f all payments ***made by such board during any year

subject to the guarantee***exceed the sum of utility cost savings and operational and

maintenance savings for that year, such party shall forfeit to such board that portion of such

moneys equal to the amount by which such payments exceeded such savings”).

       Section 35 does indicate that the University shall document the energy savings and

“reserve that amount for an annual payment of the contract.” However, the State’s contention

that section 35 “is clearly the ‘true up’ where the documented savings are compared with the

annual payment and the provider is required to ‘pay the difference’ ” is not what the statute

provides. The “pay the difference” language refers to the difference between the actual and

projected savings and not the difference between the savings and the annual payments.

Accordingly, we reject this argument.

        We are mindful that legislative intent can be discerned from ascertaining the consequences

that would result from construing the statute one way or another. In re Detention of Lieberman,

201 Ill. 2d 300, 308, 776 N.E.2d 218, 223 (2002). If Siemens’ construction is applied, the

University argues it unfairly has to carry any shortfall until the end of the contract term. If the


                                                  14
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University’s construction is applied, the consequence to the provider is that it may unfairly end up

paying for shortfalls in the early years of the agreement despite excess savings over the course of

the contract.

       It appears that there are various ways to structure the guarantee in these statutes, as

evidenced by other state legislation, suggesting that the structure posited by both the State and

Siemens are both plausible and it was ultimately a policy decision as to where the General

Assembly chose to allocate the risks over the term of the contract. See, e.g., D. Smith & J.

Ferber, Performance Contracting with State and Local Governments, 25 Pub. Cont. L.J., at 395-

96 (1996) (“If the performance contractor fails to meet the annual savings guarantee, the

performance contractor may be permitted to roll over the shortfall until the following annual

reconciliation, with the intention that it may be offset by excess savings achieved in following

years. In other cases, the performance contractor can elect or be required to make a shortfall

payment to cover the difference between the guaranteed and actual savings. The determination of

whether savings shortfalls are rolled over or paid to the governmental entity on an annual basis is

often dictated by statute”).

       At some point, however, our role is to interpret the Act as written, and not to decide the

wisdom of its provisions. People v. Ramirez, 361 Ill. App. 3d 450, 455, 837 N.E.2d 111, 117

(2005); see also Ready, slip op. at 11 (deciding between competing policies is a “task better left to

the legislature”). Accordingly, since the Act does not expressly require an “annual” guarantee, we

answer the first question in the negative, holding that under the Act the provider is not required to

annually reimburse a university for energy savings shortfalls. However, nothing in the statute


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prohibits a public university from contracting for greater protections to avoid any potential interim

risks to the university. As such, although the statute provides a broader guarantee, it does not

prevent the parties from agreeing to an annual guarantee and annual reimbursement of any

shortfall. We make no ruling on whether this Agreement provides for such reimbursement.

Question Two

               “Does the 2007 amendment to [the Act] merely clarify the language of

       section 25, or does it effect a substantive change? If it effects a substantive

       change, is the change retroactive?”

       Some background facts are necessary to an understanding of this question. At the time the

Board entered into the Lease with Siemens Financial, section 25 of the Act provided in pertinent

part as follows:

               “A public university *** may enter into an installment payment contract or

       lease purchase agreement with a qualified provider for the purchase and installation

       of energy conservation measures. Each public university may issue certificates

       evidencing the indebtedness incurred pursuant to the contracts or agreements.”

       110 ILCS 62/25 (West 1998).

During the pendency of this litigation, on November 15, 2006, the trial court construed section 25

in its order denying Siemens Financial’s and MBIA’s motions to dismiss the third-amended

complaint. Therein, it ruled that section 25 authorized public universities to finance energy

savings measures exclusively through “qualified providers” who were guaranteeing the projected

energy savings and who were required to post a bond under section 20 for their faithful


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performance of the contract. Accordingly, the court held that since Siemens Financial and MBIA,

as third-party financiers, did not meet that criteria, the Lease violated the Act.

       Within three months of the trial court’s ruling, on February 8, 2007, State Senators Cronin

and Harmon introduced Senate Bill 1183 to amend section 25 of the Act. 95th Ill. Gen. Assem.,

Senate Bill 1183, 2007 Session. The bill was passed by the Senate on March 30, 2007, and

became effective on September 11, 2007, as Public Act 95-612. The preamble to this legislation

provides in pertinent part as follows:

                 “WHEREAS, It is desirable for *** public universities *** to have

       flexibility in choosing the most appropriate means by which to pay for the costs of

       purchasing and installing energy conservation measures, including without

       limitation entering into installment payment contracts or lease purchase agreements

       with qualified providers or other third-party lenders, as authorized by law.” Pub.

       Act 95-612, eff. September 11, 1997.

The actual amendment added the following italicized language:

                 “A public university *** may enter into an installment payment contract or

       a lease purchase agreement with a qualified provider or with a third-party lender,

       as authorized by law, for the purchase and installation of energy conservation

       measures by a qualified provider. Each public university may issue certificates

       evidencing the indebtedness incurred pursuant to the contracts or agreements.”

       Pub. Act 95-612, eff. September 11, 2007 (amending 110 ILCS 62/25 (West

       2006)).


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Thereafter, on January 14, 2008, the trial court vacated its earlier interlocutory ruling, recognizing

the 2007 amendment to section 25 as a clarification of the legislature’s original intent that the Act

did not require that lenders to public universities be “qualified providers.” Consequently, the

court held that the third-party financing of the environmental conservation measures through the

Lease was not prohibited under the Act.5

        Initially, we must again consider the procedural posture of this case under Rule 308. By

asking this court to consider the first part of question two, whether the 2007 amendment clarifies

the intent of the original 1997 legislation, it assumes the premise that the drafters’ intent cannot be

ascertained from the statutory language alone. For it is only then that we can resort to tools of

statutory interpretation to ascertain the meaning of a statute. Ready, slip op. at 5.

        Although we recognize that under Rule 308, we are generally restricted to the certified

question, we find that any answer to the certified question necessarily requires us to first consider

the plain meaning of section 25 as originally enacted in 1997. Our supreme court has indicated

that the legislative intent that controls the construction of a public act is the intent of the

legislature which passed the subject act, and not the intent of the legislature which amends the act.

O’Casek v. Children’s Home & Aid Society, 229 Ill. 2d 421, 441, 892 N.E.2d 994, 1007 (2008).

Courts must proceed cautiously when examining future legislative enactments for evidence of past

legislative intent. O’Casek, 229 Ill. 2d at 441, 892 N.E.2d at 1007. Thus, we must first consider


        5
            The trial court did not consider whether the Lease in this case constituted a “lease

purchase agreement” as contemplated by the statute. We are not asked to make a determination

in that regard.

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the plain language of the preamended version of section 25. See, e.g., Boyd v. Travelers

Insurance Co., 166 Ill. 2d 188, 193, 652 N.E.2d 267, 270 (1995), quoting 134 Ill. 2d R. 366(a)(5)

(explaining that in the interest of judicial economy and reaching an equitable result, a reviewing

court may go beyond the certified question to consider the order giving rise to an appeal).

       Section 25, as it existed when the parties entered into the Lease, provided that a university

“may” enter into an installment contract or lease purchase agreement with a qualified provider for

the purchase and installation of the energy conservation measures. 110 ILCS 62/25 (West 1998).

In other sections of the Act, the relationship between the university and the qualified provider is

strictly mandated. For example, the qualified provider “shall reimburse” (110 ILCS 62/20 (West

1998)) or “shall provide a sufficient bond” (110 ILCS 62/20 (West 1998)). However, in section

25, by using the flexible term “may,” the General Assembly neither expressly required a lease be

entered into with only a qualified provider nor expressly prohibited a lease with a third-party

lender. People v. Reed, 177 Ill. 2d 389, 393, 686 N.E.2d 584, 586 (1997) (usually the

legislature's use of the word “may” is regarded as indicating a permissive or directory reading,

whereas the use of the word “shall” is considered to express a mandatory reading). Thus, an

inference can be made that the General Assembly intended to provide the public universities with

some flexibility and discretion in the way they finance these contracts.

       We are also mindful that we must construe the Act in light of other relevant statutes

related to the Board’s statutory authority. Under its enabling statute, the Chicago State

University Law (110 ILCS 660/5-1 et seq. (West 1998)), the Board is “a body politic and

corporate” (110 ILCS 660/5-10 (West 1998)), and has the statutory power generally to enter into


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contracts and expend funds appropriated to the University provided that it “shall not create any

liability or indebtedness of funds from the State Treasury in excess of the funds appropriated to

[the University]” (110 ILCS 660/5-40 (West 1998)). Nothing in the Act warrants the conclusion

that the legislature intended to affect the university’s existing contracting authority.

       Moreover, we must construe statutes in a practical and common sense manner. Jones v.

Industrial Comm’n, 188 Ill. 2d 314, 328, 721 N.E.2d 563, 570 (1999). The Act is a mechanism

for public universities to make costly energy saving improvements without large up-front outlays

of funds from State revenue sources. Third-party financing is a viable means to accomplish that

objective. See D. Smith & J. Ferber, Performance Contracting with State and Local

Governments, 25 Pub. Cont. L.J., at 397-98 (1996) (third-party financing is typical in energy

performance contracts because public entities rarely have the cash readily available and bonds can

be time-consuming and involve higher transaction costs). In contrast, qualified providers, as

defined by the statute, have expertise in the design, implementation or installation of energy

conservation measures. 110 ILCS 62/5-20 (West 1998). They are not in the financial lending

business. See D. Smith & J. Ferber, Performance Contracting with State and Local Governments,

25 Pub. Cont. L.J., at 398 (1996) (The provider will often assign its right to receive payments

from the public entity to a third-party lender in order to obtain the present cash value of those

funds). Thus, any interpretation that would limit the financing of these contracts to only qualified

providers would severely constrain the ability of public universities to enter into these contracts to

achieve the stated purpose of the Act. Accordingly, for all of these reasons, we find that the plain

meaning of section 25 as originally enacted in 1997 does not prohibit the use of third-party


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financing.

         In light of our holding, we need not consider whether the 2007 amendment, expressly

allowing financing through third-party lenders “as authorized by law,” was a clarification nor do

we need to address whether the 2007 amendment was a substantive change that applies

retroactively. Nevertheless, even if we were to consider whether the 2007 amendment was a

clarification, although not necessary to our disposition, we would find that the statements made

by the cosponsor of the amendment inform and support our conclusion.

       Senate Bill 1183 was introduced three months after the circuit court’s ruling. The

comments of Senator Cronin, the Senate co-sponsor of Senate Bill 1183, strongly support that the

amendment was intended to clarify existing law with respect to the financing of these contracts.

During the limited floor debate, Senator Cronin stated in pertinent part as follows:

               “This seeks to clarify a little technical misunderstanding with regard

               to qualified providers. Qualified providers means people that are

               qualified, yes, to do the energy conservation work, but we also

               want qualified lenders. We clarify this in the bill. We want to make

               sure that a lender need not be [an] environmental energy

               conservation expert. So I think this is all clarified.” 95th Gen.

               Assem., Senate Proceedings, March 30, 2007, at 117 (statements of

               Senator Cronin).

       In sum, nothing in the preamended section 25 would prohibit the Board from entering into

a lease purchase agreement with a third party lender, and the statements of the cosponsor of the


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2007 amendment support that conclusion.

Question Three

                 (a) “[Do sections 5-15, 5-20, 15, 20 and 35 of the Act] prevent the use of

       ‘hell or high water’ financing provisions under which the university must pay a

       lessor/financier for energy conservation measures even if the measures do not

       produce a savings to the university?”

                 (b) “Does the 2007 amendment to [section 25 of the Act] affect the answer

       to this question? If so, in what way?”

       The unconditional payment clause referred to as a “hell or high water” financing provision

in the Lease requires the University to continue to pay Siemens Financial or its assignee the debt

notwithstanding any alleged failure of the qualified provider to perform its obligations under the

guaranteed energy savings contract.

        These types of unconditional payment provisions are common in commercial equipment

leases. See 810 ILCS 5/2A-407 (West 2006) (specifically sanctioning “hell or high water” clauses

in finance leases); see also O.P.M. Leasing Services, Inc. v. Hassett, 21 B.R. 993, 999 (Bankr.

S.D.N.Y.1982) (State of West Virginia as lessee of computer equipment could not terminate the

lessor’s assignee’s unconditional right to payment under a “hell or high water” clause). Given that

section 25 expressly contemplates the “lease purchase agreement” structure of financing, and

given that the “hell or high water” clause is apparently an ordinary financing term in these

contracts that is not expressly excluded here, this provision does not appear to be prohibited

under the Act.


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       Defendants maintain that the protections provided to public universities under the Act are

not lost by the inclusion of this clause. We agree. Nothing in a “hell or high water clause” would

prevent the public universities from enforcing their rights under the performance guarantee against

the qualified provider and nothing in that clause impacts the bond requirements of the qualified

provider under section 20 of the Act. 110 ILCS 62/20 (West 1998). However, the State argues

that this interpretation would require the universities to make payments to the lender, including

financing costs, for up to 20 years for faulty energy conservation measures.6

       The State’s argument is essentially a continuation of the State’s construction of section 35

and 20 in relation to the obligations the provider owes to a university and does not equate with an

argument that an unconditional payment obligation to the lender is violative of the Act. If we

presume for purposes of this question that third-party financing was contemplated by the

legislature, then the commercial reality of this type of lease makes it clear that the risk as between

the lessee and lessor for defective equipment is to be placed on the lessee who has recourse

against the supplier. 810 ILCS 5/2A-407 (West 2006). Under the construction of the Act, the

recourse against the supplier is guaranteed, albeit delayed. Accordingly, for all of the foregoing

reasons, we answer the third certified question in the negative, holding that the Act does not

prohibit the use of “hell or high water” financing. In light of our ruling, we need not consider the

affect of the 2007 amendment.


       6
           We note that prior to entering into a guaranteed energy savings contract, the public

university must evaluate the cost of “debt service” which would include financing costs. 110

ILCS 62/10 (West 1998).

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      Certified questions answered; cause remanded.

      QUINN and COLEMAN, JJ., concur.




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