PACE Financing from a real estate perspective

1. Clean Energy Financing Advisory Council:
PACE from a Real Estate Perspective
August 18, 2016

2. Clean Energy Financing Advisory Council:
PACE from a Real Estate Perspective
August 18, 2016
Ryan Carney

3. Clean Energy Financing Advisory Council (CEFAC)

4. CEFAC Partners

5. Thanks to our CEFAC Funders

6. Today’s Program
• Welcome
• Program updates
• Len Hering, RADM, USN (RET.), Center for Sustainable Energy
• Nathalie Nestor, Design-Manage-Sustain
• J. Daniel Geddis, One Mission Realty
• Rick Hoffman, HERO Program, Renovate America, Inc.
• Debra Little, Home Performance and Valuation Specialist
• Panel Q&A 9:45 AM
• Networking 10:30 AM

7. Clean Energy Financing Advisory Council:
PACE from a Real Estate Perspective
August 18, 2016
Len Hering, RADM, USN (RET.)

8. Our Mission…
Accelerate the transition
to a sustainable world
powered by clean energy

9. Clean Energy Financing Advisory Council:
PACE from a Real Estate Perspective
Nathalie Nestor

10. DESIGN – MANAGE – SUSTAINDESIGN–MANAGE–SUSTAIN
Who am I?
What We Do
1. Energy finance programs
• Design
• Implement
• Manage
2. Contractor training
3. Marketing & outreach
Qualifications
• Master in Architecture, AIA
• LEED AP
• Project Management
Professional Certification
• Sustainable design and
construction since 2000

11. … is financing important?WHY??
More comprehensive projects = more energy savings
Better equipment = more energy savings
Preserve cash flow
Lower operational costs
Better future utility cost planning
Increase property value
Consumer protections

12. DESIGN – MANAGE – SUSTAIN
DESIGN – MANAGE – SUSTAIN
… is financing important?Today’s Goals
How does PACE work?
What was the recent FHA Mortgagee Guidance?
How does PACE affect property value?
How can PACE work for me?
Key resources

13. DESIGN – MANAGE – SUSTAINDESIGN – MANAGE – SUSTAIN
Property Assessed Clean Energy
Property
Owner
Lender
Gov’t
Sponsor

14. DESIGN – MANAGE – SUSTAINDESIGN – MANAGE – SUSTAIN
Why use PACE financing?
 Saves money
• Lower utility &
maintenance bills
• Future utility planning
• Preserves cash flow
 Ability to be cash flow
positive
• Longer repayment term
 Additional consumer
protections
 Transfers with the sale of
the property
 Increase property value

15. DESIGN – MANAGE – SUSTAINDESIGN – MANAGE – SUSTAIN
History lesson
2008
- PACE born in
Berkley
- AB 811 passed
2010
- FHFA/ Fannie &
Freddie guidance
issued
- PACE stopped
2011 – 2013
- Court actions
- Gov. Brown’s
letter
- City of SD letter
2016
- FHA & VA
Mortgagee
Letters
2013
- Established CA
PACE Loss
Reserve

16. DESIGN – MANAGE – SUSTAINDESIGN – MANAGE – SUSTAIN
FHA Mortgagee Letter (July 19, 2016)
 Issued by Federal Housing Administration
• The VA issues a similar mortgagee letter
 The letter is final… not open for comments.
 1st Regulatory Approval of PACE financing
 Topics covered:
• Background & mechanics of PACE assessments
• Outstanding PACE obligations
• Disclosures, terms and obligations upon sale
• Appraisal Requirements
 DOE PACE Best Practices Guidelines are being
updated.

17. DESIGN – MANAGE – SUSTAINDESIGN – MANAGE – SUSTAIN
FHA Mortgagee Letter (July 19, 2016)
Properties can obtain FHA-insured mortgage
financing if certain obligations are met:
 Collected in the same manner as other taxes &
assessments.
 At sale, the PACE obligation continues with the
property.
 The PACE obligation must freely transfer
between property owners.
CONTINUED

18. DESIGN – MANAGE – SUSTAINDESIGN – MANAGE – SUSTAIN
FHA Mortgagee Letter (July 19, 2016)
Properties can obtain FHA-insured mortgage
financing if certain obligations are met:
 Only the delinquent portion of the PACE
assessment takes priority over the mortgage in
foreclosure.
• Full balance can not accelerate.
 The PACE obligation must be full disclosed to
all relevant parties.
 Appraisers are obligated to analyze and report
the impact of the PACE-allowed improvements
on the property.
CONTINUED

19. Clean Energy Financing Advisory Council:
PACE from a Real Estate Perspective
J. Daniel Geddis

20. REALTOR ISSUES + CONCERNS
•Surprises on Title Report during escrow.
•Lenders not comfortable with PACE assessment on property.
•Prospective Buyers and their Realtors not understanding the benefits
of PACE on a property.
SOLUTION
•Education and understanding earlier in the process for all involved.
PACE Perspective from a Realtor® J. DANIEL GEDDIS | Realtor®, GREEN, MRP

21. PACE Perspective from a Realtor® J. DANIEL GEDDIS | Realtor®, GREEN, MRP
HOW TO VIEW PACE ASSESSMENT
• Just another assessment…
• Thousands of different special assessments in California:
Mosquito abatement programs, Mello-Roos, etc.
• All stay with the property. The Difference?
PACE assessments usually result in lower utility bills.
TIPS
• “Know what you know. Know what you don’t know.”
• Review Prelim Title Report early.
• Pull Tax Records.
• Gather info.
• Ask Questions! Title Reps, Seller, PACE provider, etc.

22. THANK YOU!
J. DANIEL GEDDIS
Realtor®, Green, MRP
ONE MISSION REALTY | San Diego, CA
Daniel@OneMissionRealty.com
OneMissionRealty.com/Daniel
m. 619.606.1713
CalBRE # 01890986

23. Clean Energy Financing Advisory Council:
PACE from a Real Estate Perspective
Rick Hoffman

24. 24© 2014 Renovate America, Inc. All Rights Reserved.
WE ARE Renovate America
WE ARE administrators of the HERO Program
WE ARE privately-held & funded, based in San Diego

25. 25© 2014 Renovate America, Inc. All Rights Reserved.
HERO Property Advisors - Community Engagement Team
• Inform and educate about the HERO
Program
• Build relationships with the Real
Estate community
• Advise how to successfully navigate a
HERO property from listing to closing
1-855-225-HERO
(4376)

26. 26© 2014 Renovate America, Inc. All Rights Reserved.
SUBORDINATION AGREEMENT
HERO will:
• In the event of default, HERO
will relinquish our right:
• To proceeds
• To initiate foreclosure
• HERO will remain as a tax
assessment
NO SUBORDINATION FEE

27. 27© 2014 Renovate America, Inc. All Rights Reserved.
PACE Loans: Does Sale Value Reflect Improvements?
Journal of Structured Finance, Winter 2016
• PACE homes increased in value
$199 - $8,883
• PACE homes saw nearly a $7,000
premium when purchased from
foreclosure
• PACE home energy renovations
recover more than 100% of cost …
compared to 58% to 66% recovery
for bath and kitchen remodels

28. 28© 2014 Renovate America, Inc. All Rights Reserved.
HERO Program in California
28
$2.98 Billion in Economic Impact
14,596 Jobs Created
5.5 Billion Gallons of Water Saved
11B kWh of Energy Saved
$2.9 Billion in Utility Savings
3 Million Tons of CO2 Emissions Saved
72,732 HERO-improved homes

29. Clean Energy Financing Advisory Council:
PACE from a Real Estate Perspective
Debra Little

30. PACE is compelling proof a market exists!
Appraisers are tasked with reporting market reactions
D A T A
Disclosure Transparency Accessibility

31. Connecting our Data Dots

32. 3 Game-Changing CA Projects
MAP
Homes with Energy
Upgrades &/or Solar
DATA
Energy Upgraded
Homes
MLS
>>
<<
Green
Building
Registry
Mobile Web Application
Equips contractors to
quickly collect
project data
Conduit to MAP & GBR

33. Thank you!
Debra Little
Home Performance and Valuation Specialist
DebraLittle1@gmail.com

34. Clean Energy Financing Advisory Council:
Residential Financing Solutions
Moderated Questions

35. User Interface
Energy Upgrade One Page
Report
www. hp.org
Affirms VALUE of healthy, efficient homes

36. HPXML
Home Performance
https://www.energystar.gov/index.cfm?c=hpxml_guide.index
• Standardize terms
• Interoperability of industry software systems
• Create consistent,quality,large data sets to
inform market research and valuation of EE resources
Facilitates DATA exchange

37. Clean Energy Financing Advisory Council:
Residential Financing Solutions
Moderated Questions

38. … is financing important?What else is out there?

39. GoGreenFinancing.com

40. Financing Finder
• Searchable database
of financing options
• Filtered by property
& location
• Organized by type
• Ability to compare
products
• View product details
• Contact lender or
apply now

41. Finance Concierge
• Finance decision-making
assistance tool.
• Asks about credit
background.
• Asks for preferences.
• Creates a customized list
of products matching
your preferences.
• Provides estimated
payment.

42. State of Saving - Campaign
Saving is second nature for Californians. We save the water. We save the air. And in some
cases, we even save the sun, bottle it up and sell it right back to the grid to save some
energy. We save because we simply love where we live. And want to save it for generations
to come.
Energy Upgrade California® will connect you to excellent loans with better rates so you can
save money on your home, while you go about your job of saving the state.

43. … is financing important?Key Takeaways
FHA issued a letter in support of PACE
PACE is treated the same as other
property assessments
PACE has many benefits
Resources are available

44. NATHALIE NESTOR
949.529.0093
NGN@Manage-Sustain.com
Design – Manage – Sustain

45. Clean Energy Financing Advisory Council:
Residential Financing Solutions
Thank You!