PACE
PROPERTY ASSESSED CLEAN ENERGY
National League of Cities
Congressional City Conference, March 2012
PACENow
WHY PACE?
Private Market Solution to meet National Goals
PACENow
www.pacenow.org
PACE IS PROPERTY ASSESSED CLEAN ENERGY
How PACE Works
Local government
creates assessment
district
PACENow
Property owner
opts-in and
makes energy
improvements
Local government
provides financing
– adds assessment
to tax roll
Property owner
pays assessment on
tax bill (for up to
20 years)
www.pacenow.org
PACE – EARLY MOMENTUM WITH RESIDENTIAL PROGRAMS
PACE is a World Changing Idea… Scientific American, 2009
2008 to 2011
 Legislation passed in 27 States
 DOE best practices and
guidelines
 Pilot programs in California,
New York, and Colorado
•
3,176 EE/RE Projects
•
$68+ million in spending
•
1,000+ Estimated Jobs
 FHFA stalls residential programs
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 Legislation and Litigation
 Focus shifts to commercial
programs
PACENow
www.pacenow.org
LEGISLATION TO RESTORE RESIDENTIAL PACE
PACE Assessment Protection Act of 2011
 HR 2599 introduced by Rep Nan Hayworth on July 20, 2011
• Requires GSEs to establish fair underwriting standards for PACE
mortgages
• Programs must conform with enhanced DOE standards set forth in the
bill, such as:
o Homes have at least 15% equity
o Audit and work by qualified contractors that produce positive SIR
 51 Co-sponsors – (Bipartisan support - 29 D, 21 R)
• Nita Lowey is a co-sponsor
 Stalled in Financial Services Committee
PACENow
www.pacenow.org
LITIGATION TO RESTORE RESIDENTIAL PACE
U.S. District Court in Northern California orders Rulemaking
Federal Administrative Procedures Act requires FHFA to seek and weigh public
comment prior to imposing rules
1. Advance Notice of Proposed Rulemaking published January 26th
• Public has until March 26th to enter comment
• Comment can take any form, may address any of the FHFA’s stated concerns, and
can provide proposed guidance (i.e. a “rule” recommendation)
A. PACE assessments are valid
B. PACE poses no meaningful risk to mortgage lenders
C. PACE programs can be designed to protect the interests of local
governments, homeowners, and mortgage lenders
D. PACE programs should be allowed to proceed
• Resources, including Template Letter and Talking Points at www.pacenow.org
2. FHFA issues Proposed Rule on April 26
• Public will have at least 30 days to enter comments on proposed rule
3. FHFA issues Final Rule
PACENow
www.pacenow.org
RESIDENTIAL PROGRAM PERFORMANCE
Pr og r a m
Babylon
Boulder
Palm Desert
Sonoma County
H om e s
652
612
260
1,628
3,152
$ ( M il)
6.53
9.78
6.60
45.50
68.41
$ Av g
10,015
15,980
25,385
28,000
21,704
# Def % Def
1 0.15%
7 1.14%
Program Administrators, March 9, 2012
PACENow
www.pacenow.org
FOCUS SHIFTS TO COMMERCIAL PACE
Commercial PACE
PACENow
www.pacenow.org
POTENTIAL FOR COMMERCIAL PACE
Potential for PACE – 10 years
100 bft2 of Total Commercial by 2021
20% Retrofitted w PACE
$50 Billion - direct spending (at $2.50 ft2)
Source: McKinsey & Company, Unlocking Energy Efficiency
in the US Economy, 2009
PACENow
1+ Million jobs
www.pacenow.org
BARRIERS TO EE - COMMERCIAL
Source: EE Indicator – NA 2010, Johnson Controls and International Facilities Management Association (IFMA)
PACENow
www.pacenow.org
PACE SOLVES COMMERCIAL BARRIERS
PACENow
www.pacenow.org
PACE COMMERCIAL – EMERGING PROGRAMS
Edina, MN
California PACE-Regional
Bedford, NY
Milwaukee, WI
Northampton, MA
Ann Arbor, MI
Sonoma County, CA
Northeastern OH
Sacramento, CA
Washington, DC
Boulder County, CO
Placer County, CA
Kansas City, MO
San Francisco, CA
WRCOG, CA
Los Angeles, CA
Palm Desert, CA
Santa Fe, NM
State with PACE enabling legislation
FL-Regional
State with emerging commercial PACE program
Commercial PACE program operational (or near)
Commercial PACE program in development
PACENow
12
www.pacenow.org
COMMERCIAL PROJECTS TO DATE
Program
#
$ Total
Sonoma
37
1
29
2
1
3
73
7,270,000
1,580,000
1,520,000
320,000
37,000
575,000
11,302,000
Boulder
Placer
Edina
Palm Desert
PACENow
$ Average Interest %
232,895
7
7
52,000 1.04 / 2.29
160,000
7.25
37,000
192,000
7
155,000
Term
20 Max
20 Max
5 or 10
20 Max
20 Max
Funding
County Treasury
Clean Fund
QECB / Cnty Moral Ob
County Treasury
Clean Fund
City Backed
www.pacenow.org
ACCELERATING COMMERCIAL PACE
PACENow focus on 4 key challenges
1. Support for establishing programs

Legislation

Local, regional, statewide

Open market vs Sole source
2. Initiatives to drive CRE owner demand
3. Strategies for gaining support from existing mortgage lenders

Track record of support from national, regional, and local lenders
4. Short-term and long-term financing strategies

Short-term: owner arranged

Long-term: aggregation of assessments and securitization
PACENow
www.pacenow.org