C-PACE: Commercial & Industrial Property-Assessed Clean Energy

C-PACE A CLEAN ENERGY FINANCE TOOL FOR BUILDINGS

Who is CEFIA?

What is C-PACE?

CEFIA’s Role in Designing C-PACE

The C-PACE Advantage

The C-PACE Process

3

CEFIA is Connecticut’s Green Bank

Who is CEFIA?

What is C-PACE?


C-PACE Advantage

The C-PACE Process

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.

5

“Property Assessed Clean Energy”

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

REFERENCES EE Indicator – NA 2010, Johnson Controls and International Facilities Management Association (IFMA)

6

CRE owners face barriers to upgrades

REFERENCES EE Indicator – NA 2010, Johnson Controls and International Facilities Management Association (IFMA)

7

PACE addresses key barriers

8

PACE is around the country

9

CT Special Session 12-2 (June 2012)

Commercial, industrial & multi-family property

Requires the consent of the existing mortgage lender.

Requires SIR>1; permanently affixed

Enables municipalities to opt-in

Enables CEFIA to administer a statewide program

Who is CEFIA?

What is C-PACE?



The C-PACE Process

11

CEFIA’s Role in PACE

• Guidelines Published November 2012

• Onboard Municipalities

• Website launch in February 2012 (www.c-pace.com)

Design Program

• Technical Underwriting

• Marketing & Outreach

• Work with Existing Mortgage Lenders

Administer Program

• Qualify Capital Providers

• Offer Credit Enhancement tools (as needed)

• Provide capital (as needed)

• Develop warehouse / bonding authority (Q2 2013)

Attract Private Capital

PACE Opportunities in CT

C-PACE Municipalities

Coming soon: Stratford, Waterbury, East Granby, Fairfield, Stamford,

Manchester, Wethersfield, New Haven, Meriden, Plymouth, Cheshire

Windham

Beacon Falls

Westport

Durham

Middletown

Hartford

West Hartford

Bridgeport

Norwalk

Simsbury

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Website & Application Intake

15




• Website launch in February 2012

Design Program

• Technical Underwriting



Administer Program


• Offer Credit Enhancement tools (as needed)

• Provide capital (as needed)

• Develop warehouse / bonding authority (Q2 2013)


3rd Party Administrator:

Buonicore Partners

Program Expertise:

Buonicore Partners

• Milford, CT

• Modeled Energy Profile of CT

• Nationwide PACE experience

Technical Expertise:

Celtic Energy • Glastonbury, CT

• $1bn of energy-related projects

• Experience with large commercial end-users, utilities, and government Real Estate Expertise:

Sustainable Real Estate Solutions

• Trumbull, CT

• Benchmarking Database

• Industry leader in building energy performance assessment

Technical Underwriting

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Anything that saves energy from baseline

High efficiency lighting

HVAC upgrades

New automated building and HVAC

controls

Variable speed drives (VSDs) on motors

fans and pumps

High efficiency chillers, boilers, and

furnaces

High efficiency hot water heating systems

Upgrades: What’s Eligible?

… as long as it isn’t going anywhere

Combustion and burner upgrades

Fuel switching

Water conservation

Heat recovery and steam traps

Building enclosure/envelope

improvements

BMS

Renewable energy systems

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Appliances, e.g., refrigerators,

dishwashers, etc.

Plug load devices

Vending machine controls

Any package of measures with a

weighted average effective useful

life (EUL) that does not meet or

exceed the life of the loan

Any package of measures that does

not achieve an energy savings (over

the life of the loan) to [total

project] investment ratio > 1

Upgrades: What’s Not

Any measure that is easily

removed/not permanently installed

Any measure that does not result in

improved energy efficiency

Extending natural gas lines to the

property line to enable a PACE-

eligible gas conversion project.

C-PACE Program Review Paths

Full Assessment – whole building analysis

Begin with a Level I screening step (by CRE owners consultant), designed

to cost effectively identify projects with compelling potential savings & ROI

Proceed to Level II/III audit when significant savings potential exists.

Determine the optimized bundle of ECMs, calculate project cost,

projected energy savings & key financial metrics

Fast Track

Designed for buildings where prior energy audits have been completed

including ECM recommendations, but failed to get implemented due to

owner inability to self-fund the project

Less technically complex projects (or targeted ECM)

Pre-approved projects under utility EE incentive/rebate programs

PACE Opportunities in CT

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• Website launch in February 2012

Design Program

• Third Party Administrator: Technical Underwriting



Administer Program


• Offer Credit Enhancement tools or capital (as needed)

• Serve as legal conduit


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Qualified Capital Providers

CEFIA qualified 8 capital providers through a RFI.

“Lending tree” model

Owner Arranged Financing

Property owner is free to choose their capital provider from the private market. There is no government financing required.

Funding: Capital Sourcing

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$$$ $$$ C-Pace Capital

Provider Contractor Property Owner

$

$ $

$

CEFIA Town Tax

Collector

Town Land

Records

Property/ECMs

Lien $$$

Mortgage Holder

Notification &

Consent

Assessment & C-PACE

Services Contract

Funding

Agreement

Funding: Capital Flow Process

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Property Audit/

Energy Assessment

Contractor Property Owner

$

$ $

$

$$$


$$$

25


$

$ $

$

$$$


$$$

Mortgage Holder

Notification &

Consent

26


$

$ $

$

$$$


$$$

Mortgage Holder

Notification &

Consent

CEFIA Program

Administrator

Technical

Review

27


$

$ $

$


$$$

Mortgage Holder

CEFIA

C-Pace Capital

Provider

Notification &

Consent

Funding

Agreement

28


$

$ $

$


$$$

Mortgage Holder

Notification &

Consent

CEFIA

C-Pace Capital

Provider

Assessment & C-PACE

Services Contract

Funding

Agreement

29


$

$ $

$


$$$

Mortgage Holder

Notification &

Consent

CEFIA

C-Pace Capital

Provider

Assessment & C-PACE

Services Contract

Funding

Agreement

Property/ECMs

30


$

$ $

$


$$$

Mortgage Holder

Notification &

Consent

CEFIA

C-Pace Capital

Provider

Assessment & C-PACE

Services Contract

Funding

Agreement

Town Land

Records

Property/ECMs

Caveat

$$$ $$$

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Equipment &

Services


$

$ $

$


$$$

Mortgage Holder

Notification &

Consent

CEFIA

C-Pace Capital

Provider

Assessment & C-PACE

Services Contract

Funding

Agreement

Town Land

Records

Property/ECMs

Caveat

CEFIA

$$$ $$$

32


$

$ $

$


$$$

Mortgage Holder

Notification &

Consent

CEFIA

C-Pace Capital

Provider

Assessment & C-PACE

Services Contract

Funding

Agreement

Town Land

Records

Property/ECMs

LIEN

CEFIA Town Tax

Collector

$$$ $$$

33


$

$ $

$


$$$

Mortgage Holder

Notification &

Consent

CEFIA

C-Pace Capital

Provider

Assessment & C-PACE

Services Contract

Funding

Agreement

Town Land

Records

Property/ECMs

LIEN

CEFIA Town Tax

Collector

$$$ $$$

34


$

$ $

$


$$$

Mortgage Holder

Notification &

Consent

CEFIA

C-Pace Capital

Provider

Assessment & C-PACE

Services Contract

Funding

Agreement

Town Land

Records

Property/ECMs

LIEN $$$

$

$

CEFIA Town Tax

Collector

$$$ $$$

35


$

$ $

$


$$$

Mortgage Holder

Notification &

Consent

CEFIA

C-Pace Capital

Provider

Assessment & C-PACE

Services Contract

Funding

Agreement

Town Land

Records

Property/ECMs

LIEN $$$

36

$$$ $$$ C-Pace Capital

Provider Contractor Property Owner

$

$ $

$

CEFIA Town Tax

Collector

Town Land

Records

Property/ECMs

Lien $$$

Mortgage Holder

Notification &

Consent

Assessment & C-PACE

Services Contract

Funding

Agreement


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Recap:

Audit

Notification to Mortgage Holder / Consent

Project Review by Program Administrator

Referral out to Qualified Capital Providers

Capital Provider Selected by Owner

Negotiations Funding Agreement

Assessment & C-PACE Services Agreement (CEFIA – Owner – Cap Provider)

Caveat on the Property (CEFIA – Town/City)

Funding Disbursement(s) & Project Work Commences

Project Completion

Finalization of the Lien on the Property, Payment Schedule, etc.

Owner Enjoys More Efficient Building & Repays Funding via Tax Bill


Who is CEFIA?

What is C-PACE?



The C-PACE Process

The CUSTOMER (building owner): PACE addresses key barriers

Near term plan to sell? Lack of funding? Cannot assume more debt? Insufficient payback/ROI? Split incentives? Uncertain savings/technical expertise?

Tax obligation fixed to property 100% upfront, 20 year financing PACE assessments qualify as OPEX Positive cash flow in year 1 Assessment/savings pass to tenants Technical underwriting / SIR>1

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Capital Providers

• Low risk investment opportunity

• Senior lien

• Secure repayment mechanism (taxes)

• Legal and technical structure administered by CEFIA

Mortgage Lenders

• Improves Building Financials/Risk

• Lowers OPEX

• SIR>1

• No acceleration

• Creates a more attractive building for occupants and owners

• Finances deferred maintenance needs

Municipalities

• Creates economic development & jobs

• Reduces energy costs for businesses

• Reduces pollution

Benefits to Other Key Stakeholders

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Funding: SAMPLE BUILDING

Project Cost $ 2,200,000.00

Incentives $ (500,000.00)

Total Cost $ 1,700,000.00

i @ 15 years 5.50%

Term 15

Energy Savings $ 230,000.00

PACE Assessment ($169,363.52)

NOI ∆ $ 60,636.48

Coverage Ratio -1.35

Before PACE After PACE

Loan $ 7,500,000.00 $ 7,669,363.52

LTV 65% 56%

Market Value $ 11,538,461.54 $ 13,738,461.54

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Deeper Savings │ Greater Value

Who is CEFIA?

What is C-PACE?



The C-PACE Process

Pace is 4 easy steps

Make payments

Install project and get funding

Apply for funding

Choose your upgrades

Jessica Bailey Director, Commercial and Industrial Property Assessed Clean Energy

(860) 257-2888

Visit us online

ctcleanenergy.com/cpace

C-PACE: Commercial & Industrial Property-Assessed Clean Energy

Documents