This is an Ignite Style presentation (five minute max presentations with slides that automatically advance every 15 seconds) that was a part of the 2014 Solar Symposium Innovation Showcase. Bracken Hendricks, CEO, Urban Ingenuity PACE and Affordable Housing: Find out how Property Assessed Clean Energy (PACE) financing can fund clean energy retrofits and help solve broader financial challenges for affordable housing developers, owners, and property managers by providing a new capital solution for affordable housing preservation.

1. Innovation in Low Income Solar
PACE Financing

2. 2
Urban Ingenuity helps structure,
underwrite, and finance energy
efficiency and clean energy projects.
• DC PACE Commercial: Program
Administrator
• Connecticut Green Bank: Official
Multi-Family Housing Partner
• Urban Atlantic: affordable housing
and community development
• Micro-Grid Infrastructure: Walter
Reed Army Medical Center

3. Property Assessed Clean Energy
PACE: An innovative financing structure that enables
commercial, industrial, and multi-family property owners to
access financing for qualified energy upgrades and repay
through a benefit assessment on their property tax.
Private capital
provides 100%
upfront, low-cost,
long-term funding
Repayment through
property taxes
A senior PACE lien is
put on the property
and stays regardless
of ownership
3

4. An Old Concept
Philadelphia Opt-in Fire District 1736
PACE is an acronym for “Property Assessed
Clean Energy,” a financing structure that uses
municipalities’ ability to fund improvements in
the public interest by attaching special tax
assessments to properties.
This is the same mechanism used by countless
other cities across the country, to fund
infrastructure projects such as water and sewer
or road improvements. However, unlike most
special assessment districts, PACE assessments
are completely voluntary.

5. Federal Regulatory Questions:
• Single Family Residential
Mortgage Market Concerns
o Seniority of Lien
o Risk Exposure to Lenders
o Underwriting Standards
• Emerging Market Responses
o “Lender Consent”
o Non-FHFA Insured
Applications for PACE

6. Source: PaceNow
PACE Market 2014
More than 200 PACE commercial projects funded
$65 million in funded projects
$215 million near-term pipeline

7. Underwriting Standards
Financial Underwriting
• Debt Service Coverage: 1.2 or better
• Loan To Value Target: 80% or better
• Project Size: <10% of property value
• Lender Consent Required
Technical Underwriting
• Energy Baseline & Modeling to
demonstrate that Benefits > Cost
• Measurement and Verification
ensures performance over time

8. Snapshot: CT C-PACE in Year 1
▪ 90 towns on board = 85% of the CT market eligible
▪ 200+ contractors trained
▪ 20 qualified capital providers
▪ $40M internal warehouse CEFIA capital
▪ Over $40 million in deals approved
▪ 50 C-PACE deals approved, average size $700K
▪ Sold initial $30M+ portfolio through bid process (closed 5/15/2014)
▪ 100 Projects in Pipeline = over $100M
▪ 22 mortgage lenders have provided consent

9. PACE Benefits for Multi Family Housing:
• 100% financing: Can cover hard and soft costs, including engineering,
legal, and design, with no out of pocket payment.
• Cash-flow Positive: Underwritten so project energy savings exceed debt
service, improving operating income on day one
• Long Term Financing: Amortization can be up to 20 years or longer,
greatly improving cash flows
• Stable Fixed Rate Terms: Assessment is tied to the building, not
traditional debt, and transfers with ownership.
• Confidence in Savings: C-PACE measurement and verification helps
insure that savings are realized over time

10. PACE Multi Family Housing Opportunities:
Ideal Multi Family Projects:
• “Cash flow sensitive” owners & property managers – long term financing
• Debt constrained property owners – benefit from 100% financing
• Deferred maintenance – Great for large capital replacement projects
• Market Rate Rental Housing – Deep retrofits or Single measures
• Affordable Housing Preservation – Gap financing for deep “Gut Rehabs”
• Coops – Positive SIR means lower monthly assessments
More Complicated Properties:
• Federally insured or financed loans – Fannie Mae, Freddie Mac, FHA
• State financed affordable housing – May have other debt or grant options
• New construction – Possible but requires constructing energy baselines
• Condominiums – Needs common area tax ID, asset value, and no covenants

11. Where can PACE work now?
1. Completed LIHTC Projects: DC Pilot Project
2. Cash Flow Sensitive Projects: COOPs
3. State & Locally Funded Projects: CHFA Pilot
4. Closing Gaps in Capital Stack: Women’s
Shelter
5. Solving Security Concerns: CT Solar PPAs
11

12. DC PACE Case Study: 400 M St SE
1st Use of PACE for Affordable Multifamily Project
Property:
• 139 Unit Affordable Multi-Family
• Part of HUD Hope VI development
Project:
• $340,000 PACE Assessment
• Installed Measures:
• Common area lighting and controls
• water fixtures
• 37kw PV installation
• Energy Savings:
• 20% reduction in energy use
• + 3.5% of energy sourced from solar
• Total annual benefits: $41,000
• Annual assessment payment: $30,000
• PACE bond underwritten by regional bank

13. COOP: Comparative Financial Analysis
$8,000,000
Installed Costs
PACE + Reserve
Funds
PACE Cash Flow
From Savings
PACE
Mortgage + Reserve
Funds
Mortgage
Percent Financed 73% 35% 100% 73% 100%
Reserve Fund
$2,160,000 $5,200,000 - $2,160,000 -
Contribution
Closing Costs $219,035 $105,000 $300,035 $87,600 $ 120,000
Aproximate % 3. 5% 3. 5% 3. 5% 1.5% 1.5%
Total Financed $6,044,435 $2,898,000 $8,280,035 $5,927,600 $8,120,000
Interest Rate 6.00% 6.00% 6.00% 3.86% 3.86%
Finance Term (Years) 20 20 20 10 10
Annual Debt Service $(519,651) $(249,146) $(711,849) $(715,445) $(980,062)
Annual Assessment
$ (1,003) $(481) $(1,374) $(1,381) $(1,892)
(Cost Per Unit)
Annual Savings (Energy,
Maint. And Replace)
$543,299 $263,974 $543,299 $543,299 $543,299
Net Benefit $23,648 $14,828 $(168,550) $(172,146) $(436,763)
Avg Annual Net
Benefit/(Cost) Per Unit
$46 $29 $(325) $(332) $ (843)

14. COOP: Comparative Financial Analysis
$8,000,000
Installed Costs
PACE + Reserve
Funds
PACE Cash Flow
From Savings
PACE
Mortgage + Reserve
Funds
Mortgage
Percent Financed 73% 35% 100% 73% 100%
Reserve Fund
$2,160,000 $5,200,000 - $2,160,000 -
Contribution
Closing Costs $219,035 $105,000 $300,035 $87,600 $ 120,000
Aproximate % 3. 5% 3. 5% 3. 5% 1.5% 1.5%
Total Financed $6,044,435 $2,898,000 $8,280,035 $5,927,600 $8,120,000
Interest Rate 6.00% 6.00% 6.00% 3.86% 3.86%
Finance Term (Years) 20 20 20 10 10
Annual Debt Service $(519,651) $(249,146) $(711,849) $(715,445) $(980,062)
Annual Assessment
$ (1,003) $(481) $(1,374) $(1,381) $(1,892)
(Cost Per Unit)
Annual Savings (Energy,
Maint. And Replace)
$543,299 $263,974 $543,299 $543,299 $543,299
Net Benefit $23,648 $14,828 $(168,550) $(172,146) $(436,763)
Avg Annual Net
Benefit/(Cost) Per Unit
$46 $29 $(325) $(332) $ (843)

15. CHFA Pilot Project:
15

16. Supportive Housing Facility:
• Shelter and Supportive Services
o PACE offers key gap financing
o Allows underwriting based on
energy savings
o Supports a deeper retrofit
o Addresses capital needs
o Offsets fundraising burden

17. CT Public Housing Solar PPA:
• PACE Secured Solar PPAs
o PACE secures PPA repayment
o Eliminates credit concerns
o Green Bank & HFA partnership
o Assembled debt & equity
o Allows for tax benefits
o Makes hard deals work!

18. CT Public Housing Solar PPA:
• PACE Secured Solar PPAs
o PACE secures PPA repayment
o Eliminates credit concerns
o Green Bank & HFA partnership
o Assembled debt & equity
o Allows for tax benefits
o Makes hard deals work!

19. Conclusions:
• PACE provides value for affordable housing
• Regulatory challenges are being addressed
• Market confidence is growing
• PACE may not be for every project
• But it can make affordable solar projects work

20. For More Information Contact:
Bracken Hendricks
CEO, Urban Ingenuity
bhendricks@urban-atlantic.com
Cell: 301.502.0532