Webinar: How CleanFund helps real estate owners and developers save with CPACE Financing
Innovative Capital for Innovative Developers | Video Description:
Webinar by CleanFund, Parkview Financial, and Partner Energy discussing how Commercial PACE financing works well with senior lenders and drives even further value from property owners engaging in energy audits to drive down utility costs and increase property value and savings.
Innovative Capital for Innovative Developers
Description: Webinar by CleanFund, Parkview Financial, and Partner Energy discussing how Commercial PACE financing works well with senior lenders and drives even further value from property owners engaging in energy audits to drive down utility costs and increase property value and savings.
okay good morning everybody welcome to the webinar this morning how see pace
helps you save through lower blended capital cough and higher energy savings
what we're going to try to touch on here is kind of how C pace fits into the
capital stack we also have a Park View financial here to talk about a senior
plus pace product which helps lower your blended overall cost and then we have
partner energy also speaking to energy efficiency projects audits and
assessments and how she pays can help you with those improvements with us we
have Larry Perry with Parkview financial and we've lent Collins with partner energy we're going to give a CPAs
overview then we're going to talk about the senior plus you pace in the capital stack and then we'll talk about the
energy efficiency projects in suit pace and at the end we're going to do we'll have a QA as a reminder you can ask
questions through the Q&A feature and at the end of the the webinar will be also
forwarding the slides and a recording of the webinar to all the participants registered participants so starting off
we have Larry Perry with Park you here hi good morning Larry Perry Park View
financial I'm the vice president in charge of origination for Park View for
the western United States that's Colorado to the west plus Texas we are however expanding our lending
footprint into the Midwest and the south including Florida to another eight
states shortly how our own product is is a minimum size of three million maximum
of 100 million we just increased our loan size this January we lend on
commercial industrial retail multifamily
resident lend on as hospitality health care self storage and service
stations but the other major food groups we do or we typically are a 75% loan to
cost not to exceed 65 percent loan to value however we can increase that leverage level to combine loan to cost
of 80 percent for eighty two and a half in conjunction with the pace product
with clean fund which increases the leverage and there non-recourse pricing
and loan loan type is is also beneficial
as in lower rate and amortized our blended rate for the two two products in
the capital stock making a higher leverage and and a better better rate
overall for for the client Parkview has a non-recourse option as well as a
recourse oxidant pricing and function I think that's a that's a good good place
to stop and move to the next okay Thank You Larry next would be last good morning this is
a Lance columns on the director of sustainability at partner energy partner
energies a nationwide energy efficiency and sustainability consulting firm we
work on new construction and existing buildings really helping to owners and
operators to identify capitalize and implement energy efficiency projects you
know we do everything from energy audits to green building certification to retro-commissioning
energy modeling and a whole suite of other services across the whole building
lifecycle and you know we've been in business for about ten years we do
probably about a thousand energy audits every year and over a hundred energy green certifications for LEED Energy
Star and other certifications each year and we work on a number of programs
certainly pace which we're going to talk about today but also a number of agency programs for Fannie Fannie Mae Freddie
Mac Hood Tax Credit deals all across the country and you know the rebate
incentive programs nationwide Thank You Lance and I'm John spell key managing director
of clean fund based here in Los Angeles in terms of clean fund a clean fund is
one of the largest pays providers in a direct lender nationally we were vertically integrated platform founded
in 2009 we've got probably the most projects funded at 80 80 or more
projects and we closed the first one 40 for a securitization in July so clean
fun clearly is a group that can execute on pace financing we're also a direct lender so we're a capital provider we're
not a broker and we have capacity through top ten construction lender a
household name we also have life codes and insurance companies program
expertise we have staff on board that have strong governmental relationships that help us draft pace legislation and
really understand the programs in the jurisdictions that are looking for pace
in terms of structuring we've got the best team in place to help structure
pace on almost any deal so pace overview
commercial property assessed clean energy financing the acronym is C pace was conceived in O 7 the C portion which
is clean energy is basically to finance qualified energy water and seismic resiliency related improvements seismic
in California and hurricane strengthening in Florida are also included pace is a voluntary Assessment
which is put on the property taxes and repaid via your tax bill in most jurisdictions it's currently in 35
states in DC and 20 states of active pays programs and in 2019 we're going to
be rolling out new programs in New York Chicago Boston New Jersey in Pennsylvania you can go on our website
also and see the map of where pace is live if you notice California Texas
Colorado Utah Florida are a lot of states or states that have pace enabling
legislation call Alif ID paste cost a case CPAs can
finance hard and soft costs for capital expenditures for existing assets of
course we're going to speak to the energy efficiency side today and then value-add repositioning
retrofits including seismic paces also available for financing and then new
construction projects property types basically do all commercial properties
we do not do for sale at this time so office retail and so on and then in
terms of the improvements including seismic solar HVAC lighting building
windows roof water conservation the soft costs associated with the improvements
and an irrigation and control so essentially all your building systems anything that has to do with the energy
components of your building and most jurisdictions would qualify for pace
when should you consider using C pace you know when you're doing capex and
those and those capex or those capex improvements or scope are revolve around
energy efficiencies and upgrades or seismic we can fund potentially a hundred percent of capex costs pending D
you know depending on the DSCR and the loan-to-value or the combined eser and the combined loan-to-value large tenant
improvement projects renewal renewable energy which will speak to two today seismic and then of course new
construction redevelopment and we also line up well within the opportunity
zones we have a couple slides for that in terms of the opportunity zone caps stack structuring you know here are four
scenarios that a traditional cap stack might look like if you notice as you get
down to the bottom number for pace lines up really good with opportunity zone
funds and the deferral benefit because we're long term so if you have
opportunities own equity and you find a project we suggest you go eighty percent
equity 20 percent pace pace most likely we'll be able to fund up to
a hundred percent of the improvement or the the required improvements to the
property and then you essentially putting a long-term fixed-rate fully advertising financing on at the
beginning and then you're also able to shield 80 percent equity in that deal
and then going forward if you find another qualified deal in an opportunity
zone you refinance the asset you bring the leverage up a little bit you keep pace on and then you move those those
funds into the next qualifying improvement we found that the 80/20 structure works well because you're able
to shield a lot of opportunities own equity in one deal and it's hard enough finding deals today much less qualifying
or deals than underwriting the Opportunity Zones so it enables you to shelter money refinance it and then move
those funds on to other assets and keep that going but pace works very well in this regard because we're 20 to 30 year
financing and the goal of an opportunities fund would be to hold 5/7 and potentially 10 years plus the
takeaways on the opportunities own funds we can fund a significant portion of the substantial improvements
we're aligned in terms of timing because it's long term non-recourse fixed-rate
fully advertising financing in the low sixes so essentially you're able to put permanent financing on day one and you
will not have to recap or have any sort of another capitalization event down the road until you're ready and have another
asset lined up permanent financing at the commencement and then the 80/20 structure allows for significant
investment in the single asset that you can then move to other assets as you locate them and underwrite them here's a
quick case study that we financed last year 24 million in pace essentially
produced a 2 million dollar annual savings on energy it's $1 Dallas Butler
building down in Dallas we were able to basically almost get a ha 200 bit
reduction in the blended overall capital cost so that is the message today which is use pace to lower your blended
capital and then going forward you have a long-term fixed-rate financing vehicle
on the property that you can choose to prepay or keep on the property going forward so senior plus pace in the cap
stack in terms of park - we'll get to
their terms but you know big picture five hundred and thousand - really
there's no top-end because of our capital of relationships long term
financing with the interest rate fixed at the commitment letter it's non-recourse runs with the property the
pricing today 250 to 350 bits over the like term Treasuries put you in the high
fives you know mid 6s and the spread depends on the risk related to the project all
the property types we talked about eligible improvements we talked about you know we talked about the financing
which is a special assessment we do need senior lender acknowledgments and the
loan to value ratio is up to 20% LTV on construction and total top end combined
LT V of 95 percent the 20% is an LTC
alone the cost geography its national and approvals we help with the lender
acknowledgments and with Parkview here we'll talk about the the probably best
way where pace fits with a senior lender Part D is financing basically of the
capital stack to combine loan to cost of 80 percent a Parkview would provide 60
and clean fun 20 total ad in some cases we can put that 282 and a half I can
leverage our loan can be structured as recourse or non recourse is just a
pricing difference typically we're going to be at two points and 899 interest
only was no prepay again up to 80% combine loan to cost the
the timing in the process we coordinate with clean fun we we as
you an LOI they issue an LOI and we work together to consolidate that
presentation with the sponsor and the broker if there's one involved to make
sure that the program is going to work and we we as part of you to allow
preferred equity as well as mezzanine financing and we work well with the
opportunity coverage opportunities own capital structures as well great Thank You Larry
so the senior plus pace model is you know when you when you deal with
stretched senior lenders or debt funds let's say they go to 75 to 80 percent or
they're willing to go to 75 to 80 percent it's up to the client in the broker to really suggest and and and
really encourage the lender to use pace or have you used pace because if they
will lay off a piece to pace then you're able to borrow at low sixes which in
Larry's case will come in on an 80% deal will come in with 20 they'll come in with 60 the 20% set a blend of the six
and Larry's at nine or ten you can save you know three hundred bits
on that slice and then on a blended basis you'll see some of the savings could be as high as 100 250 bits on the
overall structure at the whole time you're not increasing the lenders loan to cost they're already comfortable
going to 75 or 80 they're just laying off a piece to pay so it's up to the
brokers and the clients to really suggest and bring us in on stretch
senior deals to try to pass those savings along to the client
how will the lender view see pace you know it's an assessment not debt we do
not accelerate and we don't accelerate the senior in a default situation all you have to do is keep your taxes
current and you have to keep the pace payment current which is on the tax bill the only thing that is senior to a
lender in any given year would be that year's taxes in a default situation you just bring
the tax bill current bring the pace payment current and you do not have there's no balloon or acceleration of
the principle when a senior lender underwrites the deal they'll you know on a go-forward they'll look at the DSCR
and the combined loan-to-value each deal is different but we encourage folks to to bring those deals to us and we will
help you under them and then we'll let you know kind of what the best strategy is on that asset so in summary the
optimum see page utilization of benefits anybody who's working with a stretched senior or believes they'll be using
stretch seniors or debt funds really should explore pace give me a call and
we'll walk through the project and we'll show you where we benefit or help
benefit you and drive the savings to you on an annual basis and we'll get to case studies in a minute pace will finance
the energy efficiency project that Lance is going to talk about here in a minute and through their energy model and you
will finance the cost at the energy modeling and audits suggest capex were
great a supplemental loan obviously it's subject to death coverages and loan the values and who the senior lender is but
it's a great source of financing for capital expenditures that revolve around
energy efficiencies its fixed-rate fully amortized non-recourse financing that's
fully transferable and assignable on transfer it travels with the property so there's no assignment assumption or fee
it can be prepaid at any time so the optionality is that you use pace and at
some point in the future whether you capitalize or sell you can always prepay
pace if it does not fit into the long term plans page does require senior
lender acknowledgment and consent and we help with that we do have lenders that have consented to pace and we have
lenders that will work with pace on a project-by-project basis and as I mentioned earlier in a default situation
we do not accelerate the amount of the delinquent or unpaid pasted payments are due basically keep
your taxes current so going forward we got three case studies we're going to
talk about on the reuse and repositioning we have a new construction case study the funding for capital
expenditures in seismic retrofitting you know there's a comprehensive list of pace eligible project items also in
California there's a three-year look-back so if you completed a project that would be eligible for pace we could
look back three years thirty six months and fun pace on a three-year look-back
basis going forward if you you know we have talked to folks that have discussed
the potential of passing through some portion of pace on their hotel bill as a green tax so that you can help defer the
cost of the pace payment and then potentially depending you know subject to your lease language could possibly be
passed through on a triple net basis or included in your base year that those are on case-by-case basis so senior plus
pays case studies that we're working on with Park View Larry do you want to talk
to those okay could have adaptive reuse
creative creative office and retail so on this on this particular example Park
View would be coming in with fifty five percent clean fun ten for a total of
fourteen million including equity so our rate on this would be eight nine nine
again no prepayment penalty interest only and and of course clean fun is six
point three so that give us gives us a weighted average on the range of seven
point eight nine again the blended rate and and the leverage of the primary benefits of this type of structure so in
summary on this particular deal which is adaptive reuse [Music] by using pace you're able to bring the
weighted average caught the funds from nine percent down to seven eight on an annual basis you're saving about a
hundred and seventeen bits which is 150 thousand eight years so on a three-year hold you're looking at almost a half a
million dollars of savings the next project adapt another adaptive
reuse this is multifamily Park View came in at nine almost ten percent page came
in at six forty seven and on a blended basis it lowered the the blended overall
by about seventy bits which saves the the sponsor seventy thousand a year
roughly times three so you're you're talking about almost two to three hundred thousand dollars a year in
savings by bringing in pace case study three again a historic building adaptive
Ria's same same concept in this case you're saving one hundred and sixty two bits which 150,000 a year again almost a
five hundred thousand dollar savings and this is all with senior lender
cooperation and acceptance on these deals and then on a new construction
project luxury Class A if you look down the Delta column all the way to the
bottom it's about a half a million dollar four hundred and thirty seven thousand dollar savings going from a
traditional senior plus meds to a senior plus pace product I would say that's at
the low end we were fairly conservative and the rates have dropped so in theory
that four hundred could be five hundred to seven hundred thousand dollars so really it does work bringing pace in
working with a stretched senior or debt founder or senior lender that's going to use pace and use pace blend your overall
cost down so now we're into the energy efficiency projects and see pace portion
and I'm sure thank you John so I guess I
wanted to spend a little bit of time and talk about technical aspects of how you
would meant bearish energy and water savings and utilized pace as part of all process
and when we're talking about you know different you know you know scopes of
work we really break it down into a new construction process versus existing buildings the passes the past
looks similar but the starting place is a little bit different so here's just kind of an overview of some of the
services that we would typically provide for a page deal for our new construction project we're going to start with energy
modeling I'm gonna explain that a little bit more in second then we typically do support an owner with implementation
support reviewing some middles draw our views and punch walks and then we do some final commissioning to make sure
that all the systems are operating as they should be at the end of the construction process and then also
support with any rebate incentives applications because we find that a lot of projects if they're you know pursuing
higher efficient level of efficiency and their design might also qualify for a local rebase through and some you know
utility programs and other their you know jurisdictional items for existing
buildings the process is similar as well but rather than starting with the energy model we start with the energy audit
sort of assessing the existing building establishing what its baseline energy consumption is and then identifying you
know potential opportunities for improvement from there so to kind of
jump into the new construction process in a little bit more detail you know the
really important part when you're dealing with building a brand new golden or even maybe let's let's say and as a major adaptive reuse is to develop an
energy model showing the estimated energy consumption of the building as
compared to sort of standard baseline energy code requirements and that's we want to be able to use as a tool to
identify potential savings that can be underwritten through pace you know will typically review the plans of the
building or work with the architecture and engineering team to evaluate the proposed design you know develop
essentially two models one that looks at the minimum energy code requirements for whatever the local energy code is in
your jurisdiction and then also what the purple what the proposed design shows and establishes you know what the
comparison and against those two things are if need be we can recommend you know potential solutions for improving your
energy efficiency reducing your energy or water consumption and go from there and then you know develop a final report
that itemizes out those energy efficiency measures HVAC lighting domestic hot water etc that are beyond
the code requirements that can be isolated out for financing purposes you know typically it takes us a few weeks
to develop an energy model working with the architecture engineering team you know we usually like to get started
around the you know design development or early construction document phase where there's enough information known
about the project where we can do a you know thorough analysis on there but you know as I mentioned we can also sort of
make recommendations to the design team to see you know what the financial implications would be based on you know
estimated building energy performance as well - I will remind everybody that
please ask questions through the question module and we will be sending
recording and all the slides after the show thank you so for an existing
building if you have an existing property that you're looking at making improvements on and you know want to be
able to utilize the pace product from that perspective you know the we're the
place that we start is be an energy audit so we're going to do you know a site walk of the property to evaluate
all the existing building systems evaluate all the current energy and water usage at the property looking at
you know backwards about twelve or thirteen months of utility data electricity gas water etc to establish a
baseline of what that building is currently doing from my energy perspective from there we can sort of
identify potential savings opportunities whether it's replacing equipment or
changing out lights or you know operational improvements all those sorts of things so that we can analyze
potential savings will identify those at a table which I'll show here in a couple
of case studies of potential energy conservation measure and again the financial impacts return
on investment you know cost savings consumption savings etc for evaluation
to arrive at a final scope of work that you know the owner and everybody agree upon and then we'll develop a final
report from there which gets submitted to the pace program administrator for their evaluation and use for financing
the project as well so two examples I
wanted to show one of the new construction projects or really it's a pretty significant adaptive reuse
project multifamily building down in Dallas Texas that was 1950s office
building that was you know sort of sitting vacant for a number of years and was acquired and I think 2014 or 2015
and then reused to provide 149 units of housing so as such that it's you know
converting from an office used to a multi-family use we treated it as a new construction project and who did it and
developed an energy model to identify a potential energy electricity natural gas
savings based on new improvements to the system's new HVAC lighting hot water
everything was all installed in the bill but every all the systems were brand new nothing was maintained of the original
building you know what we were able to show as you can see sort of highlighted in yellow is that you know as compared
to the local energy code in Dallas the new proposed design was able to show a
37.2% energy cost energy scene energy use savings and at 26.8 cost savings and you
know a little over a million a million and a half pounds per year of greenhouse gas emission savings the cost of those
improvements sort of above what the sort of baseline minimums of which you would have had to do per just a regular
building code requirements is about two million dollars and payback on that on
that component of the project itself was about eight million dollars the ROI of
about twelve and a half percent for a year so you know obviously that's a pretty high level of energy efficiency
that the project was able to achieve you know there were a number of other goals
for this particular property including achieving LEED certification and complying with other local
jurisdictional requirements that incentivize efficiency but you know all of those measures can all have you know
synergy that you know go hand-in-hand with pace and everything else that you want to do on a project this on this and
this project pace could probably fund a hundred percent of the two million dollars we're talking high fives low
sixes which would then increase and improve your your return on investment an annual basis and it's an eight-year
payback the next example I just wanted
to share is an existing building study so this was an existing multifamily building 121 units in Los Angeles that
you know I think the building was originally built in the 70s and you know
went through a major renovation a couple years ago utilizing pace to finance a number of
energy efficiency and water efficiency improvements to the property to lower the overall energy consumption for the
property and offset the tenant used in the common area energy use so you can see the table here on the screen shows
you know some of the measures that were included in the project scope of work switching all the lighting to LED
lighting installing low-flow shower heads and faucets and toilets putting a
large solar PV system on the roof of the building switching from a gas type
tankless domestic hot water to a tank domestic how large would take was
domestic hot water new roofing new lighting in the apartments and new HVAC
systems for the common areas and so the overall energy reduction from its you
know sort of previous usage baseline was about 30% and the cost savings about
$90,000 per year the total investment cost for all those measures is about
$480,000 worth of improvements so it gives you about a little over five year payback
and ROI of about eighteen point seven percent and the project so you know that again all those measures and
improvements were able to be financed through the LA County pace program thank you guys and the last thing I just
wanted to share you know that I think we always see is that there's a lot of synergy in sort of what owners may want
to do with their scope of work on new construction or existing building and how that can kind of tie in to the sort
of new opportunities that can be unlocked with pace certainly there's just the sort of bottom line energy and
water savings reduce energy bills increased Noi you know depending on you
know all the goals of the owner whether you have sort of corporate policy goals or you know larger sustainability
initiatives you can you can you know show reduced carbon footprints and increase resiliency in your projects as
I mentioned in the beginning of the projects often times if you are achieving a level of energy efficiency
above you know the energy code requirements there are local rebates and incentives that may be available through
utility companies and other agencies and then quite honestly you know a lot of
these properties that are making these levels of improvements you know whether it's new construction or renovation may
automatically get pretty close to qualifying for a green certification the leads or lead or Energy Star or
something like that and then you know certainly just increase the whole marketing opportunities and raise the
buildings profile some of the examples that we've seen have you know converted you know Class B and C properties the
Class A properties and you know gotten LEED certification or Energy Star certification which you know certainly
repositions the property in the market itself and you know can certainly all
sort of take advantage of this you know pace to make all that happens so
utilizing C pays first steps for us would be contact me property address you
know give me the picture of the project the property type the project what your
what the scope is completed values proposed caps taxes the
the overall executive summary of what you'd like to do whether it's in an om or just you know just thoughts and what
I can do is work with you to help craft a pay strategy and then quote your
project and then help also find senior lenders for your project and park views
requirements are very similar the information that we need to produce a
letter of intent along with Cleveland so Lance if somebody were to get started
with you what would use to get at what point in the project and the concept stage yeah for for new construction
projects we probably want to be involved somewhere once the design has advanced
to the point where we can sort of analyze you know propose you know MEP systems things of that nature you know
as I mentioned if it's still very early in the process we can develop multiple energy models to look at scenarios if we
choose system X versus system y where the energy and cost savings impact
associated with that on existing buildings we certainly want to be involved as early as possible because
the auditing process really helps to develop a scope of work that may ultimately be included in the project
you know we might start with a long laundry list of potential savings opportunities and then sort of evaluate
what the you know paybacks and savings are associated with those and narrow that down to a final scope of work that
you know fits all those sort of budgetary requirements and financing requirements so certainly for existing
builders we want to be involved as early as possible and partner is also kind of
a full-service company do you want to explain a little more about not just the energy side but if somebody comes to
partner you can be somewhat of a full-service solution sure so in addition to partner energy we have a
sister company partner engineering and science which is a nationwide due diligence company as well too so we can
provide a whole variety of things from seismic you know analysis and retrofits
to p and a's DCA's surveys you know anything you may need in the in the
diligence process for you know lender review or for analyzing existing
property everything from lead and asbestos up and down the line so you know especially on an existing building
or something that's being acquired an AK rehab process you know we can kind of leverage a lot of horsepower to the
table to provide everything under one umbrella not only the energy side but also on the fuel engines and
environmental regulation side of things and then Larry going back to kind of how
to get started with the Parkview you're a construction lender so you want to be
brought in at GMP or you want to what point in a project would you like folks
to be contacting you on their project well recognizing it takes from four to
six weeks to finalize a construction loan from executed LOI to closing we'd
like to be in the process typically at least two months before they're ready to issue permits
however we could certainly start early on and in the process so that the
sponsor and the broker can have a pretty good idea of what we can and can't do as
we go through the the process to get to the point of RTI and then when deals
come in to Larry we're working on I think five deals together he then brings me into the mix and we
quote alongside Parkview and then work together with the client with the broker to come up with a workable solution
workable structure so takeaways from webinar before we get to Q&A stretch
seniors and pace I think you know again I think anybody who is contemplating you
know middle market banks and debt funds should really look at what pace does to
the profitability in the project so I'm always here to answer any questions and
quote any deals the senior plus paced Parkview financial product after working with Parkview here for the last six or
eight months we've been able to get you know from 75 to potentially over 80%
in some cases of leverage including pace and then Parkview allows pace to
maximize so you are able to drive the savings to the client and then Parkview
would finance the remainder benefits of energy modeling and audits you know it's
pretty self-explanatory lower cost increased Noi and preaches the value and
then also potentially increases or enhances the marketability in the project both on a sale basis as well as
a lease ability basis opportunities own alignment pace is aligned perfectly with
opportunities own strategies which is hold long term get as much of the tax
benefit as you can and you really only have to finance once if you go with the
80/20 scenario because you're putting permanent financing at twenty in pace and then equity for the rest the
optionality is you can refinance and then move into another opportunity to
qualified opportunities on investment and industry-leading panel park views leader in the in the construction
lending space partner energies a leader in their space and clean fund is a leader in pace so now is the time for
questions we've gotten a few in and I'll just go ahead and feel these and put
these out I'll answer the first one which is if I'm a stretch senior what is the value prop to me for bringing in see
pace and Larry if you you want to answer that or you want me to you go ahead so I
think you know from our perspective it really drives to savings to the client and by bringing in pace both the broker
as well as the client appreciates lenders who will look look out for the
benefit of the client and the debt fund will be putting out less money or the lender will be putting out less money
but but ultimately the value proposition is from a brokers perspective you're introducing a creative solution to
helping increase the profitability of the project possibly even helping you make it work
you as a lender you you might actually get the deal because as more clients and brokers are pushing pace
maybe there's a competitor out of the market that might work with pace which means if you are willing to work with it
and get creative then you have a better chance of winning the deal so it really is kind of a full-service solution to
everybody where the lender gets the project potentially would get more projects because as the value
proposition of bringing pace in is is is is seen by more than more folks will
want to see that structure which means you could be you could be driving business to your to your company I think
this is for partner if I'm not developing a lead building what is the requirement for energy savings relative
to code is it the same in every state could be paced but go ahead sure no I
can answer that so it is different in every state I'll start with that part and not even just every state but sort
of every jurisdiction where pace is administered so it does vary so some
some portions in California there is the requirements is just to meet the current energy code in other areas you can have
a requirement where you need to be at least ten or fifteen or twenty percent better than the code minimums to be
eligible for pace programs I know we've seen some programs on East Coast that have higher thresholds but it's
definitely not the same everywhere so you need to look at your specific project location we can identify you
know what the targets we need to be either for new construction or existing purposes and clean fund also gets
involved early and because of our you know the breadth of our programs knowledge we will identify you know with
the address of the property we'll quickly identify the program what the nuances of each program is and we will
communicate that immediately to the borrower or the client and then that's
when we get involved in you know in strategizing how to structure it you know what are the extra cost potentially
of getting there and what the value proposition is for the
improvements so another question so in terms of case studies clean fund has case studies on their website so WWI
ENCOM and that link will be coming out in our in our email in terms of timing
of pace you know we advertise forty-five to sixty it really all depends on how quickly the senior lender moves how
together the client is in terms of the the documentation and materials we can
move very quickly but I would say we're probably between you know anywhere from
45 to 75 days but we will work in conjunction with the senior lender we
won't be duplicating due diligence will be relying on the same report so we'll
try to do everything as efficiently as possible by working with the senior lender so is the amortization of pace an
average life number of years or weighted average of pace so that the excuse me
the term of the pace is based on your average estimated useful life of the
improvement so each improvement that pace identifies will have an average
estimated useful life and then the overall term of the facility will be the average estimated useful life of all
those improvement with the older apartment retrofit for two million does
the savings and energy cost equal the payments for pace no actually the you
actually end up with about a 25% bottom line benefit after pace on a 25-year
amortization on the cost savings so there is a value add immediately not
only because you're using six percent money to finance the improvements but also you are also seeing an immediate
annual improvement in your operating cash flow net of the pace payment
just looking down through some of that other questions what what are what is
included in soft costs are engineering audits eligible yes alma all of the soft
costs associated with the qualified direct improvements are covered so there
will be a allocated share of a and E the MEP would be covered energy audits and
assessments would be included in pace so you know there's an allocated portion of
permits and fees that would be included as we go through looking for qualified cost if I have a project in the
jurisdiction that doesn't have pace yet how can I bring pace there contact us we
will work with you we'll work with our programs expert and quickly size up the
the opportunity to bring pace to that jurisdiction will quickly find out the
timing and look at that relative to the timing of the project with Parkview and
hopefully other lenders the advantages if pace is not eligible but might be
down the line there's always an opportunity with Parkview to come in after the fact as they will allow it so
if the program is created 3 4 or 5 months down the road Parkview would come in finance start the
project and then when pace was eligible or pace was live then we could finance from there and either pay down a portion
of the loan or structured however we like what's the timeframe typically that
you can come in after the fact John on assuming Parkview closed the loan and in
our documentation allowed pace to come in it subsequently is there a time limit
as to well recognizing we're typically going to have a loan under 36 months
average will be 18 to 24 so they would have one to two maybe even up to three
years to come back in with pace after the closing yes good question so officially it's 36
months costs have to be expended within 36 months of the pace funding in your
case or kind of a bridge financing case where it's generally shorter term money
there is a point where midway through the project probably there's not enough savings to warrant coming in having pays
coming in but I would say if you're within the first 25 or 30% of the project we could probably come in then
and then be enough time left on the facility to add the cost savings benefit
okay all right so I think we've reached
the end we've kind of finished up with all the questions you've got contact
information on your screen will be sending everything around the recording and the slides so we're all available
contact each one of us and we will follow up with answer any questions we
can answer and you know we'd love to love to hear from you so I want to thank everybody for participating and joining
and have a great day thank guys all right thank you