© 2014 bricker & eckler llp j. caleb bell, partner bricker & eckler llp 100 south third...
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© 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
© 2014 Bricker & Eckler LLP
PACE
PACE = “Property Assessed Clean Energy”
© 2014 Bricker & Eckler LLP
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
© 2014 Bricker & Eckler LLP
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
© 2014 Bricker & Eckler LLP
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.”
© 2014 Bricker & Eckler LLP
PACE Financing
© 2014 Bricker & Eckler LLP
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
© 2014 Bricker & Eckler LLP
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
© 2014 Bricker & Eckler LLP
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
© 2014 Bricker & Eckler LLP
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
© 2014 Bricker & Eckler LLP
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
© 2014 Bricker & Eckler LLP
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.
© 2014 Bricker & Eckler LLP
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)
© 2014 Bricker & Eckler LLP
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
© 2014 Bricker & Eckler LLP
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
© 2014 Bricker & Eckler LLP
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
© 2014 Bricker & Eckler LLP
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
© 2014 Bricker & Eckler LLP
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
© 2014 Bricker & Eckler LLP
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
© 2014 Bricker & Eckler LLP
PACE Financing for Commercial Buildings
© 2014 Bricker & Eckler LLP
J. Caleb Bell, Partner
Bricker & Eckler LLP
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
Columbus-Franklin County Finance Authority
Columbus Region Energy Fund
Columbus-Franklin CountyFinance Authority
Jean Carter RyanPresident
Columbus-Franklin County Finance Authority
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
Columbus-Franklin County Finance Authority
Eligible Improvements:Energy efficiency retrofits to existing
buildings including:LightingEnergy management systems and controlsHigh efficiency HVAC
Columbus-Franklin County Finance Authority
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
Columbus-Franklin County Finance Authority
Territory includes 11 Counties in Central Ohio:Franklin, Union, Logan, Delaware, Marion,
Monroe, Knox, Madison, Pickaway, Licking, Fairfield
Can go statewide
Columbus-Franklin County Finance Authority
Trinity Project:$655,000 loan4.35%; 12-yearsPayback 7.2 yearsAnnual savings - $78,000; Net $4,200
Columbus-Franklin County Finance Authority
Trinity Project:Non-Pace1st mortgage on buildingFinanced LED lighting and controls
Columbus-Franklin County Finance Authority
State Loan Loss Reserve:CFFA qualified for additional reserves50% up to $500,000 per projectCap at $2.5 millionMust meet state criteria
Columbus-Franklin County Finance Authority
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.
Columbus-Franklin County Finance Authority
Energy Loan Process:CFFA prepares term sheetClient executesCFFA Finance Committee & Board approvalClose on financing
Columbus-Franklin County Finance Authority
Jean Carter RyanPresident
(614) 429-0177
(614) 551-9268 (cell)[email protected]
http://www.columbusfinance.org