Connecticut s Clean Energy Finance and Investment Authority. C-PACE: A financing tool for building owners

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1 Connecticut s Clean Energy Finance and Investment Authority C-PACE: A financing tool for building owners

2 Agenda Connecticut, USA Overview Who is CEFIA? What is C-PACE? The C-PACE Advantage CEFIA s Role in Designing C-PACE The C-PACE Process 2

3 Connecticut Basics Population: 3.6 million State bird: American Robin which isn t actually that important, but now you know one random fact about CT 3

4 Connecticut s Commercial Real Estate Market 4

5 State of the Market Connecticut Need for energy efficiency improvements is significant, and the timing is ripe for investment: High energy prices in CT; increases anticipated from transmission improvements Existing state and utility energy efficiency finance programs have been fully utilized Deferred capital expenditures have created need for upgrade/replacement of core building systems 5

6 Who is CEFIA? Help ensure Connecticut s energy security and community prosperity by realizing its environmental and economic opportunities through clean energy finance and investments. Support the Governor s and legislature s energy strategy to achieve cleaner, cheaper and more reliable sources of energy while creating jobs and supporting local economic development 6

7 Property Assessed Clean Energy 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 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 7

8 PACE addresses key barriers 8

9 Connecticut Special Session Public Act 12-2 (June 2012) Commercial, industrial & multifamily property Requires the consent of the existing mortgage lender Requires SIR>1; permanently affixed Enables municipalities to opt-in Empowers CEFIA to administer a statewide program 9

10 C-PACE Advantage for Owners 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 Assessments may qualify as OPEX Positive cash flow in year 1 Assessment/savings pass to tenants Technical underwriting / SIR>1 10

11 C-PACE Advantage to Other Stakeholders Capital Providers Mortgage Lenders Municipalities Low risk investment opportunity Senior lien Secure repayment mechanism (taxes) Legal and technical structure administered by CEFIA Improves Building Financials/Risk Lowers OPEX SIR>1 No acceleration Creates a more attractive building for occupants and owners Finances deferred maintenance needs Creates economic development & jobs Reduces energy costs for businesses Reduces pollution 11

12 C-PACE Partners do Technical Underwriting 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 gov t 3 rd Party Administrator: Buonicore Partners Hartford West Hartford Bridgeport Norwalk Simsbury Stamford Stratford Southbury Real Estate Expertise: Sustainable Real Estate Solutions Trumbull, CT Benchmarking Database Industry leader in building energy performance assessment 12

13 Determine Project Eligibility 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 as long as it isn t going anywhere Combustion and burner upgrades Fuel switching Water conservation Hartford West Hartford Bridgeport Norwalk Simsbury Stamford Stratford Heat recovery and steam traps Building enclosure/envelope improvements BMS Renewable energy systems Southbury 13

14 The Challenge M&V: Data Management Platform Multiple interdependent stakeholders have divergent interests The Solution C-PACE s transparent, unbiased technical and financial underwriting: aligns interests removes barriers closes deals! 14

15 M&V: Data Management Platform 15

16 Approach to Capital Qualified Capital Providers CEFIA has qualified a number of potential capital providers through an RFQ process Lending tree model available for building owners to use Owner Arranged Financing Property owner is free to choose their capital provider from the private market. There is no government financing required Construction and Term Financing from CEFIA CEFIA has authorized $40M short-term warehouse facility for construction and term financing followed by sell-down of loans Hartford West Hartford Bridgeport Norwalk Simsbury Stamford Stratford Southbury 16

17 Flow of Funds C-Pace Capital Providers Mortgage Holder $ $ Sell Down of Loans Funding Agreement Notification & Consent CEFIA $$$ Property Owner $$$ Contractor $ $ $ Assessment & C-PACE Services Contract $ $ $ Property/ECMs Lien Town Tax Collector Town Land Records 17

18 Ben Healey, Senior Manager Clean Energy Finance and Investment Authority