Transcript New Construction Projects and Major Renovations

C-PACE for
New Construction
February 14, 2017
1
Panelists

Brian McCarter:
CEO

Paul Scharfenberger:
Director, Finance & Operations
Chairman, NEID

Beau Engman:
CEO

Keirstin Beck:
Principal
2
Session Topics

Emergence of C-PACE for New Construction (NC)

Value Proposition

Eligibility Requirements

Case Study: CO C-PACE

Panelists Perspectives


Brian:
Program administrator

Paul:
State government

Beau:
Project developer & capital provider

Keirstin:
Owner’s rep. & consultant
Audience Q&A
3
Emergence of C-PACE for New Construction

C-PACE legislation in many jurisdictions supports NC

C-PACE projects to date concentrated in Existing Building sector

C-PACE programs now evolving to include NC

NC sector eligibility methodology differs from Existing Building

CO C-PACE NC methodology as case study
4
Emergence of C-PACE for New Construction
Existing City / County Programs with NC Project Closings

Milwaukee, WI:


1st NC project closed in Oct 2016
Pulaski County, AK:

1st NC project closed in Nov 2016
5
Emergence of C-PACE for New Construction
Existing Statewide C-PACE Program with NC Project Closing


1st statewide program to apply C-PACE to New Construction

1st NC project closed in Nov 2016

10 NC projects in rapidly growing pipeline

$296 million estimated total eligible construction cost (TECC)

$44 million estimated C-PACE eligible financing amount (15% of TECC)
6
Emergence of C-PACE for New Construction
“Coming Soon” County & Statewide Programs with NC

Multnomah County, OR:

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Arlington County, VA:


planned launch in Mar 2017
planned launch in Apr 2017
State of Rhode Island:

NC launched in Feb 2017 .

consistent with CO NC ….
7
Owner / Developer Value Proposition

Achieve higher building performance at lower cost vs. traditional financing

Integrate improvements often “value engineered” out of projects
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Reduce equity contribution

Lower construction loan amount
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No personal guarantee
8
Eligibility Req’s: CO C-PACE Methodology

Determine Total Eligible Construction Cost (TECC)
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Eligible TECC: general building construction & C-PACE transaction costs
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Non-Eligible TECC: site acquisition, environmental remediation, off-site infrastructure
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Model building energy performance at “Code Compliant” & “As Designed”
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Determine % “As Designed” performance exceeds “Code Compliant”


Example: “As Designed” performance exceeds IECC 2012 energy code by 15%
Determine C-PACE Eligible Finance Amount

Qualify for 15% to 20% of TECC based on performance % above code
9
Colorado NC Project Case Study
10
State Govt. Perspective

Paul Scharfenberger:
Director, Finance & Operations
Chairman, NEID

C-PACE for NC advances public policy goals without govt. mandates

Structured approach, including independent review/approval of modeled
building energy performance “above code”, is critical

Priority is to balance simplicity and ease of use with prudent oversight
and verification to ensure success and replicability
11
Project Developer & Capital Provider Perspective

Beau Engman:
Sloans Lake MF:
 56% Savings
 $2.8m Investment

CEO
Westin Hotel:
 44% Savings
 $6.8m Investment
Office:
 28% Savings
 $2m Investment
2016: completed 4 NC projects in 3 PACE programs, Key Considerations:




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Performance over code baseline
Program compliance
Very long development timelines
Integration with design teams (GC, Architect)
Impact to construction costs
12
Owner’s Rep. / Consultant Perspective

Keirstin Beck:
Principal

Additional financing options for NC is welcomed, especially when they
can ease equity requirements

Long term nature & transferability of PACE is attractive

Economic exercise to evaluate if project can support PACE assessment

Market considerations:

Impact on project CAM charges versus market CAM charges

In programs like CO, when jurisdictional code requires less efficiencies, could
support larger PACE financing amounts
13
Audience Q&A

Panelists

Brian:
Program administrator

Paul:
State government

Beau:
Project developer & capital provider

Keirstin: Owner’s rep. & consultant
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