© 2014 Bricker & Eckler LLP J. Caleb Bell, Partner Bricker & Eckler LLP 100 South Third Street...

© 2014 Bricker & Eckler LLP

J. Caleb Bell, PartnerBricker & Eckler LLP

100 South Third Street

Columbus, Ohio 43215

Using PACE Programs to Meet Community Development Goals


PACE

PACE = “Property Assessed Clean Energy”


Ohio’s PACE Law

ORC Ch. 1710 provisions allow municipalities and townships to work with property owners to provide up-front, assessment-based financing for property owners that want to install their own alternative energy improvements

Ohio’s law modeled after the success of Berkeley, California’s FIRST (“Financing Initiative for Renewable and Solar Technology”) program

31 states/territories have authorized PACE laws


Ohio’s PACE Law

Energy SID – A special type of financing district created under ORC Ch. 1710 for the purpose of financing:– Solar photovoltaic (i.e., roof-top and ground-mounted

solar arrays)– Solar thermal systems (i.e., solar

water heating systems)– Geothermal– Wind– Biomass– Gasification– Energy efficiency improvements


Ohio’s PACE Law

“Energy Efficiency Improvement” is given a special statutory definition:• “…energy efficiency technologies, products, and activities

that reduce or support the reduction of energy consumption, allow for the reduction in demand, or support the production of clean, renewable energy and that are or will be permanently fixed to real property.”

“Reduction In Demand” means:• “…a change in customer behavior or a change in customer-

owned or operated assets that reduces or has the capability to reduce the demand for electricity as a result of price signals or other incentives.”


PACE Financing


PACE Financing:Energy SIDs

Energy SIDs are available for residential, commercial, industrial, nonprofit and government property

Petition(s) by property owner(s)

Legislative approval by local government

Noncontiguous “districts” are permitted

A property owner cannot be compelled to join an Energy SID


PACE Financing: Flexibilities

PACE can be a tool added to other tools used in a project financing

PACE can be utilized on a single parcel or a single campus; PACE need not be city-wide or district-wide

PACE could be a project financing tool for any large user of power with deferred maintenance such as:- Commercial properties- Manufacturers- Colleges and universities- Hospitals- Municipal, county or township properties


PACE Financing: Special Assessments

PACE bonds/loans are secured by special assessment revenue constituting payments from property owners in installments for a defined period of years

Political subdivisions and PACE districts can cooperate to:– Issue revenue bonds secured by special assessments– Incur loan obligations secured by special assessments– Fund revolving loan funds with special assessment payments

Ohio’s PACE law permits special assessments that run for up to 30 years


Advantages of PACE

PACE financing structures offer significant advantages over other financing options, including:– Zero up-front cash investment– Long-term fixed-rate financing– Lower interest rates– Lien priority for delinquent PACE assessments– PACE assessment stays with the property upon sale– Ability to pass PACE assessments through to tenants– Higher rents and greater long-term property values because of energy

efficiency– Preservation of borrowing capacity through off-balance-sheet financing


ESID Trends in Ohio:Formed

Northwest Ohio Advanced Energy Improvement District: One of the largest PACE programs in U.S.; Toledo Lucas County Port Authority

Cincinnati PACE District: Greater Cincinnati Energy Alliance and Port of Greater Cincinnati Development Authority

Lake County PACE: Great Lakes Mall project

Northeast Ohio Advanced Energy District: Cleveland & first suburbs

City of Beachwood PACE District

City of Hilliard PACE District: Timberline office park project

Boardman Township PACE District: Southern Park Mall project


ESID Trends in Ohio: in Progress

Central Ohio PACE District: Columbus Franklin County Finance Authority

Dayton Regional PACE District: Dayton Montgomery County Port Authority and Citywide Development Corporation

Energy Loan Loss Reserve Program: ODSA is working in Partnership with eligible Port Authorities to provide financing reserves. Toledo Port is the Master Escrow Agent.


Great Lakes Mall

$3,375,000

Port Authority + ESID + City

Owner of Great Lakes Mall requested special assessments on main mall parcel

Energy efficient roofing and 10 HVAC systems

Mall tenants with triple-net leases obligated to pay proportionate share of tax bill and operating expenses

Transaction was win-win:– Mall owner gets cost recovery for capital improvements– Mall tenants have lower costs (energy savings vs. tax bill)


Toledo Port AuthorityLarge Industrial, Office, Warehouse Facilities

$3,894,000 Remote building energy management & data tracking

systems; tenant energy savings projects

Projects / Energy Savings:

Airport terminal & office – 30% Train station & office – 15-20% Downtown office – 45% 3 Parking facilities – 43% 3 Tenant facilities – 20-30% Total energy saved: 2,938,000 kWh & 47,000 Ccf Seaport terminal, warehouse and additional

tenant facilities under review


One Maritime Plaza

$1,055,000 – 15 yrs.

Top to bottom retrofit and equipment retro-commissioning

– cooling tower, envelope repairs, total lighting replacement, overhaul HVAC and controls

Resulted in 30%-45% electricity reduction, tenants retained – 95% occupancy, building comfortable


City of Toledo

$5,457,000 – 15 yrs.

Complete comprehensive building energy audits and implement multiple energy efficiency measures over several years. Hired energy manager to monitor projects and capture and measure energy data

Implemented multiple energy improvements for lighting and HVAC to 57 buildings; over 2,000,000 sq. ft. of buildings 2,685,000 kWh (20%) and 730,000 CCF (11%) saved in office buildings


City of Toledo (continued)

19 Fire Stations, Maintenance and Training Facilities

3 Police and Safety Buildings

6 Community & Senior Centers

Health Department and Municipal Court – large prominent downtown buildings

Environmental Services Building

2 Water Treatment Facilities – large high energy use industrial campus locations

6 Transportation, Streets, Water & Sewer Maintenance Facilities, and 5 Miscellaneous Buildings


405 Madison – PNC Bank Building

$448,000 - 15 yrs.

1932 Limestone – Art Deco; Former OI HQ. 327,045 sq. ft. – 27 story

New 5 module / dual compressor chiller

Conservative 412,040 kWh annual reduction – sets the stage for Phase 2 lighting and building controls upgrade


Timberline $926,000, part of overall

$4.5 million financing ESID + City + Owner’s

Lender Energy efficient roofing

and HVAC systems Special assessments pledged as additional security for loan;

if owner makes all loan payments, no special assessments are due

Transaction benefits everyone:– Energy savings allow cost recovery for capital improvements– Lender gets additional security for PACE portion of the overall

financing – Owner gets lower interest rate due to additional security


PACE Financing for Commercial Buildings


J. Caleb Bell, Partner

Bricker & Eckler LLP

[email protected]

614.227.2384

Questions?

Property Assessed Clean Energy (PACE):

A Tool to Sustain Central Ohio’s Growth

Mid-Ohio Regional Planning Commission (MORPC)

Voluntary Regional Association

60+ Local Governments Members

15 County Region

Mobility

Sustainability

Population Growth - Projections

Source: Insight 2050, Calthorpe Associates & MORPC

• Connecting strong regional energy portfolio to the region’s economic productivity

• Assess region’s current state of energy

• Set of eight recommendations

Regional Energy Action Plan

Columbus area residents use 8% more energy than the average American

Columbus area residents use 3% more energy than the average Ohioan

• Manufacturing (ME3) Program• 14 companies $800,000 cost savings from 42

projects

• Residential Energy Efficiency Programs• 15,000 households served

• Energy Special Improvement Districts / PACE• 6 member governments working together

Programs and Services:

Christina O’KeeffeDirector of Energy & Air Quality111 Liberty Street, Suite 100Columbus, Ohio 43215

[email protected]

Columbus-Franklin County Finance Authority

Columbus Region Energy Fund

Columbus-Franklin CountyFinance Authority

Jean Carter RyanPresident


Financing Features:Transaction size $100,000 to $5,000,000Up to 100% financing of project costsFixed rates up to 15 years Energy usage reduction should range from

15%/20% (need energy audit)Energy savings pay for the investment

Eligible Projects:Office

BuildingsRetailManufacturingHealthcare

K-12, UniversityGovernmentNon-profits


Eligible Improvements:Energy efficiency retrofits to existing

buildings including:LightingEnergy management systems and controlsHigh efficiency HVAC


Eligible Improvements:Water conservation or reduced flow Energy projects and distribution technologies

including: Waste energy recovery, power generation,

absorption chillers, process reviews Fuel cells

Renewable power generation


Territory includes 11 Counties in Central Ohio:Franklin, Union, Logan, Delaware, Marion,

Monroe, Knox, Madison, Pickaway, Licking, Fairfield

Can go statewide


Trinity Project:$655,000 loan4.35%; 12-yearsPayback 7.2 yearsAnnual savings - $78,000; Net $4,200


Trinity Project:Non-Pace1st mortgage on buildingFinanced LED lighting and controls


State Loan Loss Reserve:CFFA qualified for additional reserves50% up to $500,000 per projectCap at $2.5 millionMust meet state criteria


Energy Loan Process: Submit application which includes 3 years of

business financials, current year budget, project cost & description, and energy audit.

Arrange site visit & facility walk through with qualified architect, engineer or contractor.

Determine needed improvements, cost estimates & energy savings.


Energy Loan Process:CFFA prepares term sheetClient executesCFFA Finance Committee & Board approvalClose on financing


Jean Carter RyanPresident

(614) 429-0177

(614) 551-9268 (cell)[email protected]

http://www.columbusfinance.org

© 2014 Bricker & Eckler LLP J. Caleb Bell, Partner Bricker & Eckler LLP 100 South Third Street...

Documents

Transcript of © 2014 Bricker & Eckler LLP J. Caleb Bell, Partner Bricker & Eckler LLP 100 South Third Street...