Sustainability Summit – April 12, 2016 Beau Engman 825 North Jefferson, Suite 300 Milwaukee, WI

A new way to fund real estate improvements…. Confidential - PACE Equity2 Redirecting energy expenditures

Historic Barriers to Energy Efficiency Confidential - PACE Equity3 Split Incentive Short Term Focused ROI Requirement No Capital Complex ownership Poor Credit Common Barriers to Energy Efficiency in Private Buildings Example: SPV Example Example: Poor Credit Example: ROI

PACE Solution 4 What is PACE? Property Assessed Clean Energy (PACE) is an innovative way for owners to pay for upgrades to buildings PACE covers 100% of the improvement costs, up 20% of a buildings value, repaid through a tax assessment for up to 20 years. PACE is modeled after methods to fund public benefits such as roads, sidewalks, and fire departments. PACE funding comes from private capital sources Legislation in 32 states – 16 states have active programs Confidential - PACE Equity

Eligible Improvement Measures Confidential - PACE Equity5 LED Lighting Commercial Boiler VRF HVAC System Chiller Fume Hood Elevator Cool Roof Windows Solar PV Controls Escalator Refrigeration Parking Lights

Where is PACE Available? Pending Markets Active Programs PACE Equity Market Leader Passed Legislation

PACE Equity Solution Financing Solutions Confidential - PACE Equity7 PACE Financing 100% financing of installed equipment

PACE Equity Solution Enabling building owners to take advantage 8 Project Governance  Experience & Knowledge of PACE  Stakeholder Engagement  PACE District Formation Energy Engineering  Bundling of multiple measures  Development of energy models  Performance Assurance Financing  Project Development Funding  Construction Financing  PACE Financing Confidential - PACE Equity Common scenarios for PACE Financing

Case Study: Non-Profit University Club, Milwaukee WI Confidential - PACE Equity9  Customer Objectives  Replace makeup air units to bring the building in balance  Remediate steam traps  Window Repairs  LED Lighting  Fund HVAC as part of renovation to attract new members  Results  $660K in funded building improvements  30% Utility Savings – avg of $75K/yr over term  35% Coverage of renovation budget Project Details  First Milwaukee PACE closing (Summer 2014)  Financing by Milwaukee Economic Development Council (MEDC)  18 year term  Project governance, energy engineering & savings guarantee by PACE Equity

Case Study: Redevelopment The Mackie Building Redevelopment Confidential - PACE Equity10  Customer Objectives  Optimize design for energy efficiency  Non-recourse financing  Reduce equity requirements  Complement capital stack of tax credits, TIF and city grants  Allow for high efficiency equipment without upfront investment  Invest in and preserve a historic building  Results  $1.7M in funded building improvements  $2.2m in savings over 20 year term  “Really critical piece” of the project  Measures funded by PACE Equity include elevators, domestic hot water, low flow plumbing and HVAC Project Details  Closed in October 2015  20 year fixed rate term  20% of value at completion  Project governance, energy engineering, savings guarantee and financing provided by PACE Equity