Category: PACE

Lessons in Commercial PACE Leadership: The Path from Legislation to Launch

(Electricity Markets and Policy Group, Berkeley Lab)

Nonresidential buildings are responsible for over a quarter of primary energy consumption in the United States. Efficiency improvements in these buildings could result in significant energy and utility bill savings. To unlock those potential savings, a number of market barriers to energy efficiency must be addressed.

Commercial Property Assessed Clean Energy (C-PACE) financing programs can help overcome several of these barriers with minimal investment from state and local governments. With programs established or under development in 22 states, and at least $521 million in investments so far, other state and local governments are interested in bringing the benefits of C-PACE to their jurisdictions.

Lessons in Commercial PACE Leadership: The Path from Legislation to Launch, aims to fast track the set-up of C-PACE programs for state and local governments by capturing the lessons learned from leaders. The report examines the list of potential program design options and important decision points in setting up a C-PACE program, tradeoffs for available options, and experiences of stakeholders that have gone through (or are going through) the process.

C-PACE uses a voluntary special property assessment to facilitate energy and other improvements in commercial buildings. For example:

  • Long financing terms under C-PACE can produce cash flow-positive projects to help overcome a focus on short paybacks.
  • Payment obligations can transfer to subsequent owners, mitigating concern about investing in improvements for a building that may be sold before the return on the investment is fully realized.
  • 100% of both hard and soft costs can be financed.

Read the full report. 

SEIA Announces Release of Two Documents to Open Commercial & Industrial Solar

WASHINGTON, D.C. – The Solar Energy Industries Association (SEIA) announced today the release of two documents designed to spur investment in commercial solar projects.

The first document is a contract that combines the benefits of a Power Purchase Agreement (PPA) with Property Assessed Clean Energy (PACE) to provide customers with a valuable new financing option.

“The PACE PPA further builds out SEIA’s suite of model contracts so all solar transactions can be efficiently negotiated and financed,” said Mike Mendelsohn, SEIA’s senior director of project finance & capital markets. “Our goal is to broadly open the U.S. commercial real estate sector for solar deployment, and the PACE PPA is a valuable tool to allow that progress to happen.”

Read more (Solar Energy Industries Assoc.)

PACENation responds to the August 15, 2017 Wall Street Journal story, “More Borrowers Are Defaulting on Their ‘Green’ PACE Loans”

Residential PACE has been the best financing solution for the roughly 160,000 homeowners who have used it for energy, water, and safety related projects that they wanted or needed to make; projects that made their homes more comfortable, healthier, safer, less expensive to heat and cool, and more valuable. State and local government partners also appreciate the tens of thousands of local jobs that R-PACE has helped create and sustain. PACE financing for commercial, industrial, agricultural and non-profit owned properties is now available widely throughout the United States, a success story the Journal has ignored.

There is a great story to tell. But instead, the Wall Street Journal, yesterday, ran another in a series of misleading stories about PACE. Yesterday’s, again, includes many ill drawn conclusions and seems to reflect the author’s clear bias for sensationalism.

There is simply no evidence to suggest that PACE is a looming crisis for the banking industry or homeowners.  None.  Zero. There is no data to suggest that PACE homes are delinquent or likely to default at rates higher than those for the broader housing market in PACE served communities. With more than 60,000 new homes using PACE over the previous year, it is not surprising that the number of defaults has increased. But there is absolutely no indication that the PACE assessment has been the direct cause of the delinquencies or defaults in any but the tiny number of anecdotal cases that the Journal has reported on.

Read more (PACENation)

News: Congress should let communities set their own PACE

In hundreds of counties and cities across America, local officials are embracing Property Assessed Clean Energy (PACE). PACE effectively expands access to credit to help property owners improve or repair their properties with efficient products, while creating and sustaining local jobs at no cost to public budgets. Solution-oriented mayors like us appreciate the innovation and value of PACE – which is why it’s bewildering to see lawmakers in Congress trying to kill it off.

PACE has bipartisan appeal – and is also supported by groups as varied as the National Association of Manufacturers and the Natural Resources Defense Council – because it offers a free-market approach to advancing public-policy objectives. PACE gives property owners access to private capital to make energy, efficiency and resiliency improvements to their properties; the financing is then repaid at a fixed rate through an additional line item on the owner’s property taxes.

Read the full op-ed.(The Hill; Authors: Jeri Muoio Ph.D. (D), Mayor of West Palm Beach, Fla. and Rex Parris (R), Mayor of Lancaster, Calif.)

The low-down on PACE financing in Virginia

Property Assessed Clean Energy financing, or PACE, is starting to get more and more attention around the Commonwealth and the nation. In fact, Governor McAuliffe and his administration recognized PACE as a viable means to create more jobs, save energy, and lower electricity bills in a recent press release. As it’s popularity increases, many are still unaware of just exactly what PACE is and who it can benefit.

PACE financing is a loan program to help bring low-cost, long-term capital to fund the rehabilitation of existing and new privately owned commercial buildings through energy efficiency, renewable energy, and water conservation projects. The loan is repaid annually through the property’s real estate tax bill.

Thirty-three states and Washington, D.C. have passed legislation at the state level to enable PACE financing; nineteen of those states have already started a PACE program. In Virginia, a commercial PACE, or C-PACE, enabling law was originally enacted in 2009 and amended in 2015. Virginia’s PACE law requires a locality to develop a PACE program, and private lenders make the loan and negotiate directly with the property owner on rates and terms. Currently, Arlington County is the only Virginia jurisdiction actively developing a PACE program; however, several over localities are exploring the development of their own programs.

Practically all privately-owned commercial buildings, regardless of size, are eligible for PACE financing, including office, retail, hotel, and industrial space. Eligible PACE projects must either reduce energy consumption or generate energy, and they must be permanently affixed to the property. Eligible improvements include: insulation, solar panels, lighting, roofing, and HVAC systems. In Virginia, commercial, nonprofit, and multifamily buildings (except condos and dwellings with less than five units) are eligible regardless of their age.

PACE offers an array of benefits for each key stakeholder: property owner, contractor, lender, locality.

Property owners:

100% financing: PACE covers 100% of all hard and soft project costs, eliminating the need for upfront cash investment.

Long-term loan: With terms up to 20+ years, PACE loans result in lower annual payments and immediate positive cash flow.

Transferable: PACE loans do not have to be paid off at the time of sale; they transfer to the new owner.

Non-accelerating loan

 

Contractors:

Increase sales volume and improve profit margin: By covering 100% of project costs and eliminating the requirement for out-of-pocket expense, PACE brings financing to more customers. Since PACE is based on equity in the property and not personal credit, it is easier for more customers to obtain financing.

Fund deeper energy retrofits: Long-term financing enables customers to take advantage of projects with longer paybacks, which leads to more comprehensive projects with greater effect on energy usage. PACE can also fund efficiency improvements that are not allowable uses of Weatherization Assistance Program funds (i.e. replacement windows).

Gain support and resources: PACE programs can be developed to offer an array of contractor services to help grow business and streamline financing. Services include training, call center support, customizable marketing materials, tools to pre-qualify customers, project estimation calculators, and web portals for financial analysis and deal-tracking.

Spur demand for retrofits and energy auditors: As the number of people taking advantage of PACE increases, PACE could spur a surge of private demand for well-trained retrofitters. Additionally, as the program grows, so will the demand for energy audits. Energy audits are used to track a building’s energy usage before and after PACE improvements are installed.

 

Lenders:

Meet client’s needs of implementing upgrades

Increase value of collateral: upgrades and improvements increases the value of the property

– Enhances property owner’s ability to pay their debt: raises net operating income (NOI) through low annual payments and decreased operating costs

 

Localities:

– Creates employment opportunities for contractors, trades, engineers, vendors, etc.

– Serves as a redevelopment tool for “tired” buildings with obsolescent and inefficient systems

– Improvements make buildings more marketable, leading to better tenant retention and increases property values

Increased property taxes  and construction fees yields more revenues for jurisdictions

Reduces locality’s carbon footprint, enabling it to become a green leader

Minimal municipal burden: a third party administrator carries the cost of starting and running the program

 

The difference between traditional bank financing and PACE financing:

Traditional Bank Financing PACE Financing
Purpose: HVAC and Lighting Purpose: HVAC and Lighting
Project Cost: $100,000 Project Cost: $100,000
Loan: $75,000

25% upfront cash investment required

Loan: $100,000

$0 upfront cash investment required

Interest Rate: 5% Interest Rate: 6.25%
Term: 5 years, fully amortizing Term: 15 years, fully amortizing
Monthly Payment: $1,415 Monthly Payment: $857
Annual Payment: $16,984 Annual Payment: $10,290

 

PACE financing is a lucrative tool that can benefit all parties involved. We look forward to seeing Arlington get their program up and running later this year and are excited to continue working with other localities as they explore the feasibility of developing their own PACE programs.

If you would like additional information about PACE, please contact VAEEC Program Coordinator Jessica Greene.

How Commercial PACE Came to Michigan

Michigan passed the legislation for a Commercial PACE (Property Assessed Clean Energy) program in 2010. Businesses and commercial properties in participating municipalties can retrofit their buildings with renewable energy and energy efficient systems by borrowing money from a private lender, and repay the loan via a special assessment on their local property tax. It has taken longer for municipalities to opt in, and consequently, the state’s PACE programs didn’t really get started until 2016. Tommy Deavenport, Chief Operating Officer of Petros PACE Finance, explained how commercial PACE came to Michigan.

According to the press release:

“Petros PACE Finance, LLC has completed a $718,000 Property Assessed Clean Energy (PACE) transaction with a Michigan property owner that will fund significant energy efficiency upgrades to a 36-year-old commercial facility.

Property owner Delta Business Center, LLC plans to install a new HVAC system, LED lighting, high-efficiency fans, modern building automation system and skylights in its Delta Business Center, a 93,000 square foot light industrial building that previously housed the Lansing State Journal printing and distribution facility.

The investment is expected generate more than $1.8 million in energy savings over the 20-year life of the loan. The project will be financed without any out-of-pocket expense to Delta Business Center, LLC through the Lean & Green Michigan PACE program.”

Deavenport added, “A total of six projects have been funded in Michigan to date, with five of those funded in 2016 by Petros PACE Finance. We believe the number of projects funded by Michigan’s PACE program is going to grow rapidly in in 2017 and beyond. Our pipeline certainly continues to grow.”

Read more (Clean Technica)

PACE program seeks to spur investment in clean, efficient energy across Maryland

Maryland counties are increasingly signing on to an unorthodox program that makes it easier for owners of large office buildings and warehouses to pay for green energy projects.

Under recently enacted ordinances, companies in Baltimore, Harford, Howard counties and Baltimore City can agree to pay more in property taxes to finance solar panels, for example, or energy-efficient heating and cooling systems. The governments would pass the payments along to lenders that front the costs for the improvements.

Known as PACE — which stands for Property-Assessed Clean Energy financing — such programs have spurred $280 million in clean and efficient energy improvement projects around the country. Anne Arundel County was among the first of what are now 11 Maryland jurisdictions that have authorized PACE, and Maryland is among 19 states and the District of Columbia that have active PACE lending programs.

The arrangement aims to encourage energy-saving investments that otherwise wouldn’t happen because the loans are considered too risky by lenders or charge interest rates too high for borrowers to handle. Folding project costs into property tax bills gives lenders much stronger legal footing to go after delinquent borrowers, and that security allows them to charge lower interest rates over longer periods — about 6 percent over 20 years, for example.

Read more (The Baltimore Sun)

Leaders and Innovators Recognized with Inaugural Virginia Energy Efficiency Awards

6 Winners Honored by Virginia Energy Efficiency Council (VAEEC) and Governor McAuliffe at Richmond reception

Richmond, Virginia (November 29, 2016) – The Virginia Energy Efficiency Council (VAEEC) honored the winners of its first-ever Virginia Energy Efficiency Awards at a reception in Richmond tonight attended by Governor Terry McAuliffe. VAEEC received more than 50 nominations for the 6 awards which showcase how energy efficiency champions across the Commonwealth are helping businesses, schools, government and homeowners save money on energy expenditures while reducing energy consumption — all while stimulating job growth and our economy.

“Congratulations to all of the Virginia Energy Efficiency Leadership Awards winners, and thank you for your contributions to the new Virginia economy,” said Governor Terry McAuliffe, who attended the Awards Ceremony and presented the State Agency and Local Government awards.  “Tonight we recognize your achievements and celebrate the tremendous progress that we are making together on energy efficiency in the Commonwealth.  Thank you to the Governor’s Executive Committee on Energy Efficiency for creating this vision and to the Virginia Energy Efficiency Council for pursuing that vision and supporting an industry that is vital to helping build a new Virginia economy.”

“The winning entries are proof that energy efficiency has tremendous potential to drive economic growth, create jobs, shrink utility bills, conserve natural resources and reduce pollution. They reflect the preliminary numbers from our 2016 Clean Energy Census which indicate that building energy efficiency alone accounts for $1.1B in annual revenue,” said Chelsea Harnish, VAEEC Executive Director.“We are pleased to use these awards to shine a spotlight on innovative approaches, positive impacts in our communities, unique partnerships and replicable and scalable programs. Congratulations to the winners and thanks to all 50+ applicants.”

Any person, entity or group who works on energy efficiency in Virginia was eligible for the Awards which were chosen by a Selection Committee, comprised of members of the VAEEC Education and Outreach Committee and additional volunteer members of VAEEC.

The full list of winners and runners up with project descriptions can be found online (https://vaeec.org/programs/2016awards/), and winners’ descriptions are below.

Winners: 2016 Virginia Energy Efficiency Leadership Awards

Academic

1st Place: Manassas Park Elementary School & Pre-Kindergarten

Submitted by 2rw Consultants, Inc.

2nd Place (tie): Get2Green

Submitted by Fairfax Public Schools

Henry County Public Schools

Submitted by Henry County Public Schools

Commercial

1st Place: Development of PACE Financing in Virginia

Submitted by Abacus Property Solutions, Virginia Community Capital, and McGuireWoods Consulting

2nd Place: Ballston Garage LED Retrofit

Submitted by Arlington County

3rd Place: Exact Energy Inc.

Submitted by Exact Energy, Inc.

Local Government

1st Place: Henrico County

Submitted by Henrico County

2nd Place: City of Virginia Beach

Submitted by City of Virginia Beach

3rd Place: Fontaine Fire Station

Submitted by 2rw Consultants, Inc.

Low-Income

1st Place: Live Stream Distance Learning Energy Efficiency Project

Submitted by Community Housing Project

2nd Place: Appalachian Power Company (APCO)

Submitted by Association of Energy Conservation Professionals

3rd Place: Arlington-Alexandria Energy Masters

Submitted by Arlington Alexandria Office of the Virginia Cooperative Extension, Arlingtonians for a Clean Environment, and Arlington Thrive

Residential

1st Place: WarmWise Web-Based Home Audit Program

Submitted by Columbia Gas of Virginia and Richmond ARC

2nd Place: 1922 Blair Street

Submitted by Bain-Waring Home Energy Remodeling, RIC Design Build, and Richmond Region Energy Alliance

3rd Place: Alexandria Renew Enterprises

Submitted by AlexRenew

State Government

1st Place: Virginia Department of Corrections

Submitted by the Virginia Department of Corrections

2nd Place: Department of Mines, Minerals and Energy Division of Energy

Submitted by the Department of Mines, Minerals and Energy Division of Energy

3rd Place: Department of Mines, Minerals and Energy

Submitted by the Department of Mines, Minerals and Energy

Academic

Manassas Park Elementary School & Pre-Kindergarten

Submitted by 2rw Consultants, Inc.

The new Manassas Park Elementary School and Pre-Kindergarten were built with the goal to create a campus that was not only environmentally sustainable but that was also a resource to teach students about environmental stewardship. The buildings are designed to meet the American Institute of Architects (AIA) 2030 Challenge and use 50% less energy than code-compliant schools. Features include photo-sensors, which activate artificial light only when needed to supplement natural lighting; ground-source heat pumps, variable-speed pumping, pre-treatment and total energy recovery for ventilation air; natural ventilation; rainwater harvesting; low-consumption fixtures and kitchen equipment.

Commercial

Development of PACE Financing in Virginia: 1st Place

Submitted by Abacus Property Solutions, Virginia Community Capital, and McGuireWoods Consulting

The team was largely responsible for fixing the flawed Property Assessed Clean Energy (PACE) legislation in 2015, which previously did not give the PACE lien priority over existing mortgage holders. Through their efforts, the PACE legislation passed easily – where previous years’ efforts to modify the statute failed – with very little opposition in the General Assembly. Since the legislation went into effect in July 2015, the team has been active in building interest, support and knowledge of the value proposition of PACE throughout the state.

Local Government

Henrico County: 1st Place

Submitted by Henrico County

The mission of Henrico County’s Energy Management program and energy manager is to develop Henrico County Government and Schools as the leading local authorities for sustainable energy use and to promote the importance of good energy management for the economic and environmental well-being of the county’s residents and employees. The Energy Management program also strives to improve energy education and foster a culture of efficiency and sustainability in the County, while the Energy Manager supports green design and construction efforts for capital projects. Completed projects include energy audits, HVAC and lighting system upgrades, participation in demand response programs, commissioning and retro-commissioning, traffic and street light upgrades, building automation systems, and construction of a 4-megawatt methane gas to electricity generator at the landfill.

Low-Income

Live Stream Distance Learning Energy Efficiency Project: 1st Place

Submitted by Community Housing Project

Community Housing Partners’ (CHP) innovative energy efficiency training project involved a live broadcast from a manufactured home in Virginia to the statewide Weatherization Assistance Program (WAP) conference in Minnesota. Having been a WAP provider for 40 years, CHP knows firsthand the importance of equipping WAP crew members with the knowledge, skills, and abilities to produce quality work resulting in maximum energy savings for the low-income households served by the program. CHP developed a 3.5 hour live-stream training session with relevant predefined topics and real-time Q&A, which enabled CHP to develop a new approach to energy efficiency training that will be replicated nationally, and potentially internationally.

Residential

WarmWise Web-Based Home Audit Program: 1st Place

Submitted by Columbia Gas of Virginia and Richmond ARC

Columbia Gas of Virginia’s Web-Based Home Audit Program allows residential customers to participate in their own energy analysis and places them in the “driver’s seat” of achieving an energy efficient future. Customers participating in an online home energy audit receive a customized report recommending home improvements that can be implemented to reduce natural gas usage. Through the end of 2015, CGV’s customers have achieved over $4M in savings through the program.

State Government

Virginia Department of Corrections: 1st Place

Submitted by the Virginia Department of Corrections

The Virginia Department of Corrections (VADOC) executed the first executive branch energy services contract (ESCO) in Virginia, leads Virginia in ESCO volume, and has embraced ESCOs as an integral part of its building renewal program. VADOC has also tied energy efficiency to its public safety mission by creating an inmate training program in energy sector skills. Additionally, VADOC employs a broad fuel portfolio including renewable and alternative energy sources

About the VAEEC

The Virginia Energy Efficiency Council is the voice for the energy efficiency industry in the Commonwealth. Our members include Fortune 500 companies, universities, nonprofits, local governments, state agencies, and utilities. The Council’s goal is to ensure that energy efficiency is an integral part to Virginia’s economy and clean energy future. Together, we are creating, implementing, and sharing energy efficiency solutions that keep costs down for residents and businesses, while improving the quality of life in our work and home environments. www.vaeec.org

Do New DOE PACE Guidelines Do Enough for Low-Income Residents?

The U.S. Department of Energy has updated its guidelines for property-assessed clean energy financing for homes, as residential property-assessed clean energy programs begin to blossom beyond California.

In a few short years, the residential PACE market has grown from nearly nothing to more than $2 billion. Most of the projects are in California, but there are also expanding markets in Florida and Missouri.

PACE programs allow investments in water- and energy-efficiency retrofits and distributed renewable generation to be paid back through property taxes, which lowers the risk for both lenders and property owners.

PACE financing can potentially open up a far larger swath of the energy-efficiency market than traditional programs have been able to. For example, in a few short years, PACE has become one of the largest loan programs by volume, according to Lawrence Berkeley Lab, with the Mass Save HEAT Loan program being the other leader.

The DOE guidelines are not binding, and are therefore limited — since they are essentially voluntary. Even if they were binding, they do not go far enough to protect consumers, some consumer groups argue.

Read more (Greentech Media)

“PACE in Virginia” Webinar Recording

On October 4 we hosted the first in a new webinar series, kicking things off with “PACE in Virginia.”

Watch the “PACE in Virginia” webinar. 

The webinar covers:

  • An overview of the basics of Property Assessed Clean Energy (PACE) financing
  • Explanation of how Virginia compares to national programs and the opportunities and challenges in Virginia from a legislative and regulatory standpoint
  • Discussion of funding Virginia received from the Department of Energy and a private foundation and how we will utilize the funding to increase market outreach and education to diverse localities across the Commonwealth
  • Value proposition for property owners
  • Specific examples that show how PACE works within the capital stack and current financing termsSpeakers:
    Abigail Johnson, Abacus Property Solutions
    Bill Greenleaf, Loan Officer and PACE specialist, Virginia Community Capital
    Elyssa Rothe, Director of Policy and Market Development, PACENation

 

Abigail Johnson, LEED AP O&M, is the President of Abacus Property Solutions (“Abacus”) and founding partner in the new venture Atlantic PACE, a PACE project development and program administrative firm. In 2009, Abby founded Abacus to serve as a an independent real estate advisor to the commercial real estate industry in financing energy efficiency and clean energy projects using conventional debt, public/private incentives, and alternative financing vehicles such as PACE. Over the past three and a half years, Abby has focused her energy in growing the PACE market, both from the origination and underwriting standpoint to working with government and non-profit entities in establishing PACE programs. In particular, she was instrumental in establishing a commercial PACE program in south Florida (St. Lucie County) and in amending the flawed Virginia PACE legislation in 2015. She holds a Bachelor of Architectural History from the University of Virginia and a Master in International Economics and Management from L’Universita’ SDA Bocconi in Milan, Italy.

Bill Greenleaf is commercial loan officer at Virginia Community Capital. He started Virginia Community Capital’s energy efficiency and solar lending program for commercial buildings in 2015. Bill first started working to bring PACE loan programs to Virginia in 2009. In 2014 he established a business coalition which successfully secured passage of Virginia’s PACE legislation in 2015. He serves on the board of the Virginia Energy Efficiency Council. Mr. Greenleaf received his MBA in Finance from the Kelley School of Business, Indiana University, and his Bachelor’s degree in Economics from Skidmore College.

Elyssa Rothe joined PACENation in January 2016 as Director of Policy and Market Development after working with Energize NY, NY State’s PACE program, for 4 years. She has spent her career working in the clean energy sector, primarily under several marketing and outreach contracts for the New York State Energy Research and Development Authority (NYSERDA). She currently serves on the Board of Directors for 2 non-profit organizations in Westchester County. Elyssa graduated from New York University with a bachelor’s degree in Social Entrepreneurship, and received a Professional Certificate in Fundraising from NYU in 2014.

 

 

1 2