1. Picking up the PACE: Sun Saluters 2014 Better Buildings Case Competition

2. 2014 Better Buildings Case Competition : Picking up the PACE – Sun Saluters Current Landscape: Sluggish Participation  The stubborn facts:  Only 12 states and Washington DC have active PACE programs  Financed approximately 200 projects totaling nearly $63 million  Web traffic to PACEnow.org and a2energy.org show that awareness and demand is insufficient  Our Research:  Information gathering, including articles, blogs, and primary sources  Discussions with building owners, real estate professionals, building contractors, and real estate & development professors  Multiple rounds of interviews aimed at information gathering and solution refinement with Matt Naud, the City of Ann Arbor‘s Environmental Coordinator (runs PACE program)

3. 2014 Better Buildings Case Competition : Picking up the PACE – Sun Saluters Potential Breakthrough  Reason for optimism:  Commercial buildings consumer 20% of all US energy  These buildings require annual energy expenditures of $200 billion  20% reductions in energy use is typical post retrofit  Significant energy savings and job creation potential  In the following slides, we will show that:  The system needs improvement – too many burdens on local government and general lack of program awareness  The solution – take financing and administration to the state and encourage greater contractor involvement

4. 2014 Better Buildings Case Competition : Picking up the PACE – Sun Saluters PACE: Current Market Summary of Shortcomings A.Requires intensive outreach from City employees to start the process, but the City employee already has many competing responsibilities and little time B.Requires the building owner to find and secure their own quote/contractor C.Slow process as the Municipality must wait for critical mass These shortcomings made the Sun Saluters question several procedural aspects of the program. Matthew Naud Environmental Coordinator Responsible for PACE - City of Ann Arbor, MI

5. 2014 Better Buildings Case Competition : Picking up the PACE – Sun Saluters PACE: Proposed Market Property taxes are still assessed and managed at a local level, so the municipality will still be required to collect the PACE assessments locally and pass through to the state. Summary of Improvements A.Contractors are motivated to create new business, and will set the cycle in motion once they are aware of the programs B.Increased volume allows the State Government to raise money faster, more cheaply and have a more professional staff C.The only increased burden on the local government staff is to properly collect the riding assessment Through these improvements, the Sun Saluters believe the program will be more widely adopted, faster, easier and ultimately save far more energy.

6. 2014 Better Buildings Case Competition : Picking up the PACE – Sun Saluters How the Program is Facilitated Commercial Building Owners Standardized application template Opt-in energy reporting initiatives Contractors PACE education seminars at trade shows Easy accreditation process PACE awareness through online mediums State Government PACE project database Preferred contractor database Eventually maintain a revolving fund for easy- access capital Support energy audits when buildings are sold Local Government State-administered webinar training

7. 2014 Better Buildings Case Competition : Picking up the PACE – Sun Saluters Benefits to State and Local Municipalities Benefits to State Government: 1.Minimum resources committed to maximize revenue-generating and energy-saving opportunities state-wide. 2.Streamlined application and funding process that promotes efficient process for capital and energy- efficient investments. 3.Uniform education and communication with local municipalities and third-party contractor services. 4.Increased participation in the PACE financing program that generates increased revenue for the state from a marginal interest rate spread (i.e. 50 basis points). Benefits to Local Municipalities: 1.Reduced administrative burden of limited employee resources. 2.Improved access and communication with commercial businesses and third-party contractor services. 3.Increased participation in PACE financing and energy-efficiency investment spurring local business and job growth. 4.Potential for increased tax revenues generated by increased long-term value of properties.

8. 2014 Better Buildings Case Competition : Picking up the PACE – Sun Saluters Benefits to Local Contractors and Commercial Businesses Benefits to Contractors: 1.Increased understanding of PACE financing and incentives for personal business growth. 2.Increased support and recognition from state government and local municipalities endorsing contractors’ services and qualifications. 3.Increased access to portfolio of commercial businesses to solicit energy-efficiency audits and capital improvements. 4.Increased business opportunities enabling future job growth and expanded operations. Benefits to Commercial Businesses: 1.Increased understanding of PACE financing and utilizing energy-efficiency infrastructure improvements for increasing bottom-line performance. 2.Increased availability to capital for financing long- term cost-saving infrastructure improvements, likely at rates better than a municipality could borrow at. 3.Increased access to government-supported third- party contractor services educated in PACE financing and energy-efficiency initiatives. 4.Increased mobility of business operations and opportunities for future growth.

9. 2014 Better Buildings Case Competition : Picking up the PACE – Sun Saluters THANK YOU University of Michigan Ross School of Business School of Natural Resources & Env’t Ford School of Public Policy Team John Serron, MS/MBA John Dooley, MS/MBA Brian Rassel, MS/MBA Chris Wolff, MPP/MBA Miriam Fuchs, MS/MBA