Using PACE Programs
to Meet Community
Development Goals
J. Caleb Bell, Partner
Bricker & Eckler LLP
100 South Third Street
Columbus, Ohio 43215
© 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 groundmounted 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 customerowned 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 Authority
Large 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 retrocommissioning
– 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
Questions?
J. Caleb Bell, Partner
Bricker & Eckler LLP
jbell@bricker.com
614.227.2384
© 2014 Bricker & Eckler LLP
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
Regional Energy Action Plan
• Connecting strong
regional energy portfolio
to the region’s economic
productivity
• Assess region’s current
state of energy
• Set of eight
recommendations
Columbus area residents use 8% more energy than the average American
Columbus area residents use 3% more energy than the average Ohioan
Programs and Services:
• 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
Christina O’Keeffe
Director of Energy & Air Quality
111 Liberty Street, Suite 100
Columbus, Ohio 43215
cokeeffe@morpc.org
www.morpc.org
Columbus Region Energy Fund
Columbus-Franklin County
Finance Authority
Jean Carter Ryan
President
Columbus-Franklin County Finance Authority
Financing Features:
Transaction size $100,000 to $5,000,000
Up to 100% financing of project costs
Fixed rates up to 15 years
Energy usage reduction should range from
15%/20% (need energy audit)
Energy savings pay for the investment
Columbus-Franklin County Finance Authority
Eligible Projects:
K-12, University
Office
Buildings
Government
Retail
Non-profits
Manufacturing
Healthcare
Eligible Improvements:
Energy efficiency retrofits to existing
buildings including:
Lighting
Energy management systems and controls
High 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 loan
4.35%; 12-years
Payback 7.2 years
Annual savings - $78,000; Net $4,200
Columbus-Franklin County Finance Authority
Trinity Project:
Non-Pace
1st mortgage on building
Financed LED lighting and controls
Columbus-Franklin County Finance Authority
State Loan Loss Reserve:
CFFA qualified for additional reserves
50% up to $500,000 per project
Cap at $2.5 million
Must 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 sheet
Client executes
CFFA Finance Committee & Board approval
Close on financing
Columbus-Franklin County Finance Authority
Jean Carter Ryan
President
(614) 429-0177
(614) 551-9268 (cell)
Jryan@columbusfinance.org
http://www.columbusfinance.org
Columbus-Franklin County Finance Authority