A PACE Financing Property Assessed Clean Energy

W HAT I S PACE? 2 PACE is an assessment based financing mechanism for clean energy projects. Clean energy includes efficient heating and cooling systems, insulation, solar panels, wind turbines and more…

W HY PACE? 3 Economic Development tool Lowers cost of doing business in your community Directly impacts bottom line of local enterprises Workforce development impact on creating jobs Old building stock is maintained and upgraded Cleaner and healthier air quality in your community Positive impact on environment

O LD C ONCEPT – N EW A PPLICATION 4 PACE is a public benefit the local government facilitates through a tax assessment. It works the same way as other financed public benefits. Water & Sewer Service Parks Sidewalks Lighting Downtown renewal And now, PACE

H OW PACE W ORKS 5 Energy project construction proceeds exactly as it typically would. Rather than using a conventional bank for project finance, property owner uses a PACE provider. PACE provider directs municipality to add a line item to property’s regular tax bill, in annual repayment amounts for duration of the financing. PACE repayment is collected with property tax payments, no additional paperwork or bank payments for the property owner. Municipality remits payment to PACE provider.

W HO CAN USE PACE? Most Buildings, Even Non-Profits 6

PACE L EGISLATIVE M AP 7 33 States + DC, 80+% of US Population HI Existing Authority 2016 legislative initiatives PACE enabled

8 C-PACE P ROGRAMS T ODAY 730+ Projects – $230+ mil – 2,700+ jobs created 8 PACE programs with funded projects Early stage PACE program development Launched PACE programs PACE enabled RI DC

B ENEFITS OF PACE 9 No Out of Pocket Cost PACE covers 100% of hard and soft costs No money down Property owners can reallocate funds previously reserved for energy projects Especially important for properties with limited expenditure budgets (non-profits, new businesses, etc.)

B ENEFITS OF PACE Long-Term Financing 10 PACE allows terms up to 20 years, while standard commercial lending rarely exceeds 5-7 years. 20 year terms allows projects with long payback periods, rather than only low-hanging fruit with quick paybacks. Allows comprehensive projects with deeper impact on energy usage and significant effect on bottom line.

B ENEFITS OF PACE Cash Flow Positive 11 Long terms allow the financing to be amortized up to 20 years. This makes it possible for the annual PACE repayment to be LESS THAN the amount being saved on annual utilities from the project. Example: During the repayment term, the utility bills decrease by $20K annually, PACE repayment is $15K annually, so the NOI increases by $5K. When the financing is paid off, the business is saving $20K+.

B ENEFITS OF PACE Transferability 12 PACE is attached to a building, not an individual or business. If the building is sold, PACE repayment seamlessly transfers to the new owner as part of the taxes, as well as the savings from the energy project. Removes part of the risk in investing in capital expenditures.

B ENEFITS OF PACE 13 Leasing Structures PACE tax assessments can be passed on to tenants under most lease forms. Tenants save on energy costs and experience the same net payments, or sometimes less!

M ORTGAGE L ENDER C ONSENT 150+ Lenders Support PACE Nationwide 14 PACE becomes part of taxes which is senior to other debts. Most legislation requires existing lenders provide consent or acknowledgement that their lien will become secondary. They usually say YES, here’s why: 1.PACE project makes the lender’s collateral more valuable 2.Positive cash flow enhances the property owner’s ability to make their mortgage payments 3.Only the portion of a PACE assessment in arrears is senior 4.Underwriting standards make sure projects are appropriate

G ETTING S TARTED WITH PACE Legislation 15 1.State passes legislation defining features of their PACE program. Form a coalition of involved stakeholders to draft legislation. PACENation can provide guidance with a “Legislative Checklist” and work with your lawyers upon request. 2.Municipalities within the state pass local ordinances to enable the PACE program. Examples available on

G ETTING S TARTED WITH PACE 16 Program Models Successful PACE Programs have: Administration entity to process deals Public/Private Sector Funding Relationship with Energy Service Professionals Municipal understanding and cooperation

PACE C OMMERCIAL M ARKET S TATS Cumulative Financing 17 Displaying data for projects with known closing dates (totaling approx. $217 million)

S IMON P ROPERTY G ROUP – G REAT L AKES M ALL, OH “We hope to serve as pioneers in this arena, encouraging others to explore the many ways to reduce energy use now, rather than delaying sound financial and environmental decisions.” George Caraghiaur, former SVP for Sustainability at Simon Property Group 18 $3.4M PACE Energy Efficiency Project

P ROLOGIS, I NC. H EADQUARTERS – S AN F RANCISCO, CA “Prologis is participating in the PACE program in order to promote new, innovative solutions for financing sustainable building improvements. It provides the flexibility to drive more energy improvement programs and that’s something everyone should embrace.” Jack Rizzo, Managing Director, Global Construction and Renewable Energy, Prologis 19 $1.4M PACE Energy & Solar Upgrade

PACEN ATION 20 Supporting the PACE Marketplace PACENation is a non-profit with a mission to promote PACE financing by providing leadership, support, resources, advice, networking and problem solving for a growing universe of PACE market participants. We’re here to help! Please reach out to us at or