Presented by: Levin Energy Partners, LLC - PowerPoint Presentation

Slide1

Presented by:Levin Energy Partners, LLC

Intro to PACE

Lean & Green Michigan

Agenda

What is Property Assessed Clean Energy

(PACE)

Case Studies

Questions

What is Property Accessed

Clean Energy?

What is

PACE?

Property Assessed Clean Energy (PACE):

a long-term financing mechanism that allows commercial property owners to make their buildings more energy efficient without incurring upfront costs

.

The PACE Solution

The “Property Assessed” part is key: the energy project is repaid through a special tax assessment on your property.

Bingo: no money down and

positive cash flow

PACE Financing Benefits

Even beyond positive cash flow, PACE has benefits:

Longer-term, fixed interest

100% financing, off balance sheet

Non-recourse (no personal

guarantee)

Both benefits and remaining payment obligation go to new owner when building is sold

Energy savings guarantee

What can be financed?

Can be used for retrofit, gut rehab, or new construction projects:

Energy efficiency improvements

Water efficiency improvements

Renewable energy improvements

Refinancing all of the above

PACE in Michigan

Range of projects thus far: $117k - $5.5m

Private lender

Special assessment collected by local government

Property owner

$$$

PACE

districts

8

37

Local governments have joined Lean & Green Michigan

$21M

worth of C-PACE projects have been completed in Michigan

69%

of M

ichigan

’s population

lives

in

Lean & Green

jurisdictions

Lean & Green Michigan’s Rapid Growth

9

PACE in a capital stack

Typically PACE is used to substitute for more expensive owner’s equity or mezzanine finance.

PACE can be stacked with:

H

istoric

tax credits

B

rownfield

credits

LIHTC (need test case!)

HUD – guidance unclear – waiting on other states

Case Studies

Hatchery

Small aging apartment building

LEDs, new furnaces + HVAC, efficient toilets, low flow shower heads and other water fixtures, water heating

Lower utility bills and quality of life for tenants

$124k in PACE financing

$175k in net 20 year savings

515 Ionia

First Lansing PACE deal – gut-rehab to create mixed use

Solar, high-efficiency windows, EV charger, CHP, boiler upgrade, energy efficient appliances, LEDs + sensors

$247k in PACE financing

$267k in net 20 year savings

Michigan Public Service Commission/Michigan Agency For Energy

First state energy agency in the United States to use PACE

Negotiated with property owner to include LED retrofit, small solar installation & variable speed motors as part of the lease

Great example of how PACE solves “split incentive” problem

$480,000 in PACE financing

$800,000 in 20 year savings

Powers Distributing:

First Beer Distributor in US to use PACE

Solar PV and LED lighting had already been installed

Company used PACE for long-term

refinancing

Powers also decided to treat it as

off balance sheet

, freeing up capital for other projects

PACE Financing Summary:

Total Assessment: $445,330 Annual Payment: $40,000 Annual Savings: $66,000 Annual Cash Flow: $26,000!

The Whitney: Detroit’s First PACE Project

Building:

Located on Woodward in Midtown

Built in 1894, upgraded in 1986

52 room mansion with 20 fireplaces

Project Financing:

Total Project Budget: $873,000

Net Savings Year 1:

$67,071

(and $470k over 20 years)

Impact:

Eliminates 3,491,500 kWh of electricity and 39,760 therms of natural gas over 20 years, resulting in a carbon reduction of 232 metric tons annually.

Improvements:

Storm enclosures on 200+ windows and LED lights

Newly efficient HVAC system and kitchen ranges

Heller Machine Tools

HVAC, Roof, Lighting, Building Controls

15 year term

$978,607 in PACE financing

Total avoided utility costs $1.7 million

Total net-savings of $230,498

Troy, Michigan

Questions?

bali@levinenergypartners.com