PACE Update - Vote Solar Webinar 10.14.15
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This document provides an update on Property Assessed Clean Energy (PACE) financing programs. It discusses the growth of PACE programs across the United States, with programs now operating in 32 states and DC. It highlights the resurgence of residential PACE programs in California, where over 51,000 homes have received over $1 billion in PACE financing. The document also summarizes commercial PACE activity, noting over 390 projects financed for over $150 million to date. Recent guidance from HUD and the Federal Housing Administration is also noted as a potential game changer for the residential PACE market.
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PACE Update - Vote Solar Webinar 10.14.15
- 2. PACENOW
- 3. PACENOW More is beAer ü 501(c)3 Not-‐for-‐Profit ü FoundaJon Funded • Rockefeller Brothers Fund • Kresge FoundaJon • Tilia Fund • Energy FoundaJon • Roy A. Hunt FoundaJon ü InformaJon, Resources, Advice, Networking, Problem Solving • www.PACENow.org 3 Building PACENa-on
- 4. PACENATION More is beAer 4 Join for Free
- 5. PACENATION More is beAer 5 Sign up for the Summit
- 6. PACE IN 90 SECONDS 6
- 7. OLD CONCEPT – NEW APPLICATION 7 1736 – First Assessment District in Philadelphia Today – 37,000 Assessment Districts naJonwide ü Water & Sewer Service ü Parks ü Sidewalks ü LighJng ü Downtown renewal ü Energy Efficiency (PACE) Local Government Financing – Public Purpose Goal
- 8. WHAT MAKES A PACE DEAL? 8 A Building Owner
- 9. WHAT MAKES A PACE DEAL? 9 A Project…. And a Contractor
- 10. WHAT MAKES A PACE DEAL? 10 Someone to Fund the Project
- 11. WHAT MAKES A PACE DEAL? 11 Local Government to “Service” the Financing
- 12. WHAT MAKES A PACE DEAL? 12 Building Owner Repays with an Assessment
- 13. WHAT MAKES A PACE DEAL? 13 Assessment Repays Project Funder
- 14. WHO CAN USE PACE? Almost Any Building – Including Non-‐Profits 14
- 15. WHAT FOR? 15 Projects that Save or Generate Energy
- 16. WHY PACE? 16 No $ out of pocket – Hard and SoS costs
- 17. WHY PACE? Long-‐Term Payback 17 Standard commercial lending rarely exceeds 5 to 7 years
- 18. WHY PACE? Makes Long Payback Projects Work 18 The secure nature of PACE enables up to 20-‐yr funding: projects with simple paybacks as long as 12 years can be implemented on a posiJve cash flow basis ü Increases NOI ü Increases Property Value
- 19. WHY PACE? PACE Transfers on Sale 19 No payoff on sale – PACE automaJcally transfers to the new owner, like any other real estate tax ü No residual encumbrance and easy exit. ü Takes the risk away from invesJng in needed CAPEX.
- 20. WHY PACE? 20 Share Benefits and Costs with Tenants The real estate tax assessment can be passed on to tenants under most lease forms ü Eliminates the landlord/tenant split incenJve for triple net, modified gross leases, and industrial modified gross leases.
- 21. PACE TODAY 21 32 states and DC -‐ 80+% of US popula-on 2009 2009 2009 2013 2009 2009 2009 2009 2009 2009 2015 2008 2013 2013 2013 2011 2010 2010 2010 2010 2010 2010 2012 2010 2009 2009 HI ExisJng Authority 2015 / 2016 legislaJve iniJaJves 2013 21 2014 2015 2016 2016 2015 2016 2015 2015 2015 PACE enabled
- 22. RESIDENTIAL
- 23. Early stage PACE program development PACE programs with funded projects RESIDENTIAL PACE TODAY 23 PACE enabled 51,000+ Homes -‐ $1+ billion 23
- 24. RESURGENCE IN RESIDENTIAL ü SCEIP, HERO, CaliforniaFIRST, Ygrene, Alliance NRG • San Francisco, San Diego, Los Angeles, Sacramento, Placer ü California (CAEATFA) establishes reserve • Municipal opt-‐in insures mortgage lenders ü HERO Program securiJzes $630+ million • Deutsche Bank underwrites 3 deals, AA raJng, -‐ 4.00% ü FHFA conJnues to voice disapproval ü Growing interest in other states • NY, CT, FL, MA 24 California Leads Residen-al Renaissance
- 25. POTENTIAL GAME CHANGER 25 President Obama Backs PACE
- 26. POTENTIAL GAME CHANGER ü States maintain senior lien statutes ü Local governments treat PACE as a senior lien ü Project funders provide limited contractual subordinaJon • They give the PACE money back on houses that foreclose and are under water ü Future PACE assessments remain in place 26 HUD / Federal Housing Administra-on Guidance
- 27. COMMERCIAL
- 28. Early stage PACE program development PACE programs with funded projects JUNE 2010 28 PACE enabled 27 Projects completed -‐ $5 mil 28
- 29. 29 PACE programs with funded projects PACE PROGRAMS TODAY 390+ Projects -‐ $150+ mil -‐ Pipeline $500+ mil – 2,000+ Jobs Early stage PACE program development Launched PACE programs PACE enabled 29
- 30. PACE COMMERCIAL MARKET STATS Broad Applicability
- 31. PACE COMMERCIAL MARKET STATS Broad Applicability 31
- 32. PACE COMMERCIAL MARKET STATS Broad Applicability 32
- 33. 33 SIMON PROPERTY GROUP – GREAT LAKES MALL, OH “We hope to serve as pioneers in this arena, encouraging others to explore the many ways to reduce energy use now, rather than delaying sound financial and environmental decisions.” George Caraghiaur, former SVP for Sustainability at Simon Property Group 33 $3.4 mil Energy Efficiency – Mul- Project
- 34. 34 PROLOGIS, INC. HEADQUARTERS – SAN FRANCISCO, CA “Prologis is parJcipaJng in the PACE program in order to promote new, innovaJve soluJons for financing sustainable building improvements. It provides the flexibility to drive more energy improvement programs and that’s something everyone should embrace.” Jack Rizzo, Managing Director, Global Construc-on and Renewable Energy, Prologis 34 $1.4 mil Energy & Solar Upgrade – Mul- Project
- 35. 35 SOLAR & EE UPGRADE IN MIDDLETOWN, CT Hartord West Hartord Bridgeport Norwalk Simsbury Stamford Stratord Southbury Project § the installation of air units, variable frequency drives, high efficiency lights, occupancy sensors, air leakage improvements, an upgraded energy management system, § and a 260 kW ground-mounted solar photovoltaic system. Financial Impact ▪ Energy savings of $224k annually Impact ▪ 51M kBTUs saved ▪ 8.5M kWh clean energy produced $2.5 mil Energy & Solar Upgrade – Mul- Project 35
- 36. ACCESSING PACE – LOT’S OF MODELS ü PACE Platorm – Municipality as “Loan Servicer” ü Sole municipality • Edina (MN), San Francisco (CA), Ann Arbor (MI), Sacramento (CA) ü MulJple municipaliJes – ConsorJums • California (California First, FigTree, LA County) • Florida (Florida Green Energy Works, Ygrene) • Michigan (MI Lean & Green) • New York (Energize New York) ü Statewide – Uniformity and Scale • ConnecJcut 36 Decentralized Market – Mix of Models & Providers Low High
- 37. PACENOW ü David Gabrielson, ExecuJve Director david@pacenow.org ü www.pacenow.org www.pacenaJon.us ü QuesJons: info@pacenow.org 37 Contact Informa-on