Webinar: Improve Energy Efficiency, Maximize ROI, and Learn How to Pay for It
Webinar: CleanFund and PlanIT Impact teamed up to discuss and demo two powerful platforms to help architects, designers, engineers and contractors both model the technical components and cost savings analysis for an efficiency project, as well as produce a quick PACE financing proposal.
Webinar: CleanFund and PlanIT Impact teamed up to discuss and demo two powerful platforms to help architects, designers, engineers and contractors both model the technical components and cost savings analysis for an efficiency project, as well as produce a quick PACE financing proposal.
hello folks this is Brian Han Qi I'm with lark consulting I'm here today with
my colleagues Vanessa Gruber who's with clean fund and also Allyson Hollander who is with
Planet impact today we'd really like to discuss with you about improving energy efficiency and how to maximize return on
investment and learning how to pay for and this is really going to be a conversation about the platform that
Planet impact can bring in terms of by analyzing design and then some financing
options that clean fund can bring largely through the pace background so with that we'll go ahead and move
forward and today on our agenda quick we'll do a few brief introductions we've
kind of topped it off a little bit but will give you an idea of who we are and then a little intro into commercial pace
for those who need a little refresher I've not heard of it we'll get into that and then an introduction into who and
what planet impact is I will do a quick demo of both platforms from Planet
impact so you can kind of look at how they view efficiency modeling and cost analyses I will do a demo
clean quote and how they can use their integration and technology in terms of
pricing these types of improvements and then we'll get into a little bit more discussion about how Planet impact and
clean fund and pace funding can really help owners their reps developers and others and the architectural engineering
and construction fields to really take advantage of these platforms
and with that alternate to my colleague Vanessa Garber for her introduction thanks Brian and welcome
everyone thank you for for joining us today my name is Vanessa Gerber I work in business development here at clean
fund have been here just over two years came in doing marketing pretty
exclusively kind of the the behind the scenes of a webinar like this and a lot
of educational content as pace is still something that a lot of folks across the
the design development and course real estate finance communities are still still understanding and so now I work in
business development working with strategic partnerships across the country and also I'm involved in some
some early stage sales so very you know accustomed to all sorts of different
conversations in different parts and timelines of where project stands and
how pace can can fit into to make a project happen so looking forward to speaking more about pace some case
studies and showing you our online quote platform to help move proposals forward
and with that I'll move on to Allison introduce herself
great thanks Vanessa okay well hi my name's Allison I'm just
coming off a bit of a cold so my voice is a little scratchy era than I typically prefer for these types of
types of things but please bear with me my background I've got about six years
of experience or over the past six years of experience I've worked with you on
the software side of the AEC industry primarily with sustainably sustainability focused tools I'm
currently working with Planet impact lead sales and marketing here I have perhaps experience with Sapphira at
building performance analysis tool as well as Auto case and green building and
green infrastructure economics analysis tool so I've got some experience in the
space and I'm looking forward to telling you a little bit about planet impact and and how you can use it to find building
design strategies that improve the efficiency balance upfront costs and
maximize return on investment for the building owner or developer and I guess
we can move it on to Ryan all right hit
folks again I'm kind of helping to be a bit of a broker in between here my
experience really has been where as Alison and and Vanessa are on the ground both those capital providers and
consultants in terms of technology my experience over the last 20 years has
been both in the built environment and financing of affordable housing with the last 10 largely focused that the senior
advisor at the Federal Housing Administration on senior family and multi-family insurance and we're
recently working in the commercial and residential paced space as a broker and as a market development consultant I'm
also a LEED Green Associate and a focused on various forms of public financing structures over the last
decade so looking forward to kind of helping give up more of the on-the-ground practitioner perspective
of how deals can form and and how the traditional way of doing things versus
how planet impact and I clean fund can kind of help innovate that process and with that again we'll head back to
Vanessa to move into the substance of the program all right thanks again Brian
I'm so I want to just provide a quick overview to commercial pace financing to
you know kind of the design and engineering audience that I know we have gathered here today so ultimately
pace is simply put a financing product that is designed for and dedicated to
realizing more efficient and resilient buildings I'll kind of get into some of the of the technical aspects of it
without going too far into the details we'll provide some resources in the follow up and if you do have questions
as we go definitely use the Q&A we'll get to them towards the end but I just
want to provide an overview of what pace is with the objective of really just having this be a resource that the
design and engineering and even development teams can know about in developing projects and be able
to have the resources to dive in one when the project specifics come to the
to the financing pieces so ultimately pays its stands for property assessed
clean energy that's what the the acronym stands for in the C comes from commercial as Brad mentioned he's also
working residential which is available in a number of states but commercial is available currently its legislation
enabled so it's ultimately a public-private partnership but all of the capital is coming from from private
parties it's it's private investment for for public good improvements and that as you can see kind of in the middle of
this slide here our energy efficiency water conservation and then in relevant
states things like seismic strengthening or storm strength in it and that again has to do with the geography but
California Utah seismic places like Florida have storm strengthening components that can be financed which
are important to keeping safe healthy resilient buildings so ultimately it's
it's unlike traditional and Finance products and that it actually goes through the property tax bill takes the
same form as municipal bond finance which essentially just uses the property
tax bill as the mechanism to pay for public improvement projects so again
tying it back to private investment for the public good private capital providers like clean
fund work with property owners and developers across the country to finance these projects and the way in which they
see that ultimately the the invoice as it were the bill is whenever they pay
property taxes it shows up as a special assessment just as it would for you know the street lighting project or building
a new firehouse in the area etc so that's kind of the overview of how pace is structured and why it's structured in
that way again tying back to the earlier part of it being designed for these efficiency and
resiliency projects so there are certain qualified costs in a project
then kind of folks more directly in the commercial real estate development and lending world think of it as oh it's
only if I'm developing you know a LEED Platinum building which that might not be specifically what they're focused on
there are a lot of components from everything from a LEED Platinum building to kind of you know a capex just
infrastructure modernization project so that's a really everything that's going to improve the efficiency and
performance of the building with those eligible improvements kind of broadly listed there
you know electrical mechanical installation sealing cool roofs and then
as well as things you know like solar storage evie charging water conservation
in certain states and then we we ultimately transact across different
types of commercial buildings so anything that has a private owner so no kind of you know publicly owned property
on those of you that your public schools etc or government-owned buildings but
that's a lot of building in a building stock across the country and so cases really can be flexible in terms of the
components that are eligible and the properties that are eligible and a lot of different projects and so we find
that the the best use cases I mean this is a list of six things and within them
you know I'm sure you all can imagine different projects even within this but just to provide some categories and kind
of show the the versatility of pace financing as a product you know there's
a lot of use in value add repositioning adaptive reuse types of projects just
kind of a slightly smaller renovation and tenant improvement projects and many
states new construction is also eligible so there's a lot of components within a new construction project that are going
to be eligible for pace and we can help ultimately in that case really helped to drive costs down and then there's a you
know a whole slew of other slightly more more niche things but like I said as well building modernization capex types
projects and we're ultimately you know clean fun looking at about half a
million dollars a piece cost and like we do you know so the larger
commercial transactions so depending on the the scope it could be yeah $500,000
of pace eligible costs or fifty million and we are happy to look at that just to
give you a sense of the pace market there has been a lot of activity there
hasn't been as much activity relative to other finance products because pace has only been around a commercial pace since
2009 and so of course it's going to take a little while to take off but we're seeing very exciting development across
the industry more competition which is a good thing for the industry and for the product and having more volume across
the country and so that's just a quick little background that that pace is as
real as being deployed and clean fund was an early actor our our founders were
were pace pioneers helped design pace as a product and ultimately I know there's
a lot of text here this will just be here for your reference when we send around slides but clean fund is a direct
capital provider and all we do is provide commercial pace financing so at
the end of the day that's who we are and what we do and what we've always done
and then just you know in terms of how how clean fund can't can be here to
serve you know all of you across the AC industry is really helping to provide
you know the financing that can help you deliver your best design and can help
you deliver the best project and an avoid value engineering where it seems like costs might be getting in the way
and I know Allison I'm looking forward to getting to that to the to the demo here and then showing you kind of how
you can can use some simple resources that we've we pulled together to help
present that to to your clients but ultimately we do all the underwriting of
the project or under lay underwriting to the to the real estate because pace is tied to the to the real estate to the
property not to the to the borrower and we do all the interface with the program anyway across the country there's an active
program we make sure that the help that the components that we're financing you know meet the statute and we work with
this under senior lender which I won't get into too much detail but that's a you know part of part of the process
it's something that we are very well-equipped to do and then we fund the
transaction and the project you know can move forward we also have some some
resources that are happy to share with anyone here just in terms of informational or if you're ready to start really diving in you know just
kind of overview pace kind of some further financing terms we also have the
most up-to-date geography lookup tools so that's the first thing we do is say what's the address of this building and
is it already active in is it already an inactive paced territory and so we have
that and that is embedded into clean quote which will view here in a moment
quick case study at the time this was the largest pace transactions is in Dallas a great a great case study in
terms of total redevelopment adaptive reuse of an old warehouse building turned it into hotel
ground-floor retail as well as some top for multifamily this is a total holistic
retrofit it just kind of goes to show the variety of components are eligible
and then kind of speaking more to the cost you know value proposition of how
pace works and what it drives to the client is their overall cost of capital
there was significantly lower because they were able to use pace rather than
you know a more expensive loan and that was really because you know we were able to to to access them otherwise their
broker and owners rep if they didn't know about pace would say okay well 15%
mez loan is the best that we can do but because they know about pace and Road
will access resources to understand how it could sought into this project they are able to drive em serious amount of
savings for for their client
and then this is the case study that we're gonna dive into on Planet impact at least kind of hypothetically this was
one that we did in Rochester Minnesota it was a complete renovation
repositioning of an existing hotel with work done to the lobby common areas all
the rooms as well as some some glazing around the second floor of the building and though the project cost was about
twenty million dollars and more than two and a half million was pace eligible
through conversation with the client and the whole team decided that that was the
the desired amount for the pace financing piece until we work with them
and ended up financing the HVAC systems LED lighting envelope improvements low-flow water fixtures as well as soft
cost soft costs including permitting engineering etc are also eligible and so
with that I'm going to hand over to Allison and she'll provide an overview
and then we'll dive into her demo and then back to clean quote briefly to show you how to get a quote and a quick
proposal on a project oh sorry thanks Vanessa let's go ahead
and dive into the planet impact piece of things so today I'll give you a brief intro into Planet impact and how
architects engineers and building owners use the tool to make better design decisions that impacts building
efficiency cost and return on investment the impact can be used on both retrofit
and new build or new construction projects so of course for new
construction you would you have more flexibility or freedom with design
strategies meant but existing buildings are a really great opportunity for using
tenant impact as well now if you're putting capital into your building you want to get the most value out of it so
this can really help you to find those high-impact strategies or improving you
know improving your efficiency improving yours buildings performance balancing capital costs and lowering your utility
bills once it's all said and done so our whole mantra is about you know
being fast easy collaborative and smart so the facts he's a smart collaborative
site with a easy collaborative and smart solution she's building performance analysis we were founded by architect
Dominic Davison who through running her own design firm she consistently ran
into the typical roadblocks for these types of analyses and just sustainability and and looking at
efficiency altogether so in a lack of time need for expensive specialists or
consultants to run energy models you're no idea of what more efficient design
strategies might cost and no idea of what the exact long-term value would be for for the client so she founded Planet
impact to solve these problems and really create a fast easy collaborative and smart solution for every building
projects not just those projects with huge budgets for consultants and full-blown sustainability teams so the
smart and fast aspects of the tool come from the edge in nets under the hood of
the analysis we call that our discovery engine or really what's fueling the tool
is what we call our discovery engine we're taking something a process that
can take hours days and sometimes even weeks if you're waiting on an outside consultant to get back to you and we're
trimming it down to just seconds for the analysis by taking time to go step one
really fully set up a project and step two run the discovery analysis takes really only a few minutes but the
analysis itself you know it outputs results really nearly instantaneously we
shoot this level of speed because the discovery analysis is built on a machine
learning engine that has pre run hundreds of thousands of energy models and other model and water analysis
models ahead of time so the outcome for you is that you get accurate results in a fraction of the time as
additional models for traditional methods the output of the discovery
engine your provides suggested basically provides the answers to some of your
design questions it provides suggested design strategies for questions around energy use water use storm water and
transportation so instead of iterating and making it a guessing game as to what
you can do to your building to produce the best results the toys really does it for you and figures about a religion
kind of doesn't work for you figuring it out so we're taking something that's
orally in a job for a full engineering team or a team of consultants and we're
making it accessible to the everyday person so there are built-in inputs for envelope and mechanical system so there
is not any kind of complex project setup we're really trying to make it as easy as possible to get in create a project
and and see some actionable insights for for your building finally for architects
that are signed on to the 2030 commitment I know there's a good handful of architects on the call on the call so
this might speak to you you know there's direct reporting to the design data exchange so if you are
signed on the 2030 commitment or if you're thinking about it but are worried about the work that's entailed with just
fulfilling the reporting requirements we made it super easy to just send off your data and forgo that whole kind of
tedious process of of just inputting numbers into that and so finally teams
who have been the most successful with plenty impact users in a very
collaborative environment where the building owner architect and engineer are all looped in on the project you've
shared on the project they can sit down in a room together you know work through
some of the options that's cool see what's feasible can work through some of the pros and cons of
each option I'm really big make decisions together for the project
alright so now we're going to transition into the product demo let me go ahead
and yeah great now I'm gonna go ahead and transition to the product demo we're
gonna circle back on this hotel indigo project that Vanessa was just talking
about a moment ago this was a full retrofits a complete makeover of an
existing hotel a Holiday Inn and so you know these kinds of retrofit so really
it's such a good opportunity to to incorporate energy and water saving
measures that are going to really have a benefit to you when it comes to you know
savings utility savings in the long run so let's go ahead I'm going to share my
screen alright so I'm currently at
Planet impact I've already set up a project just for time sake but you know
can't we're gonna be looking at this Hotel Indigo to fit in the existing
Holiday Inn that's on the picture of the old existing building you can see it's pretty updated we've got a lot of
concrete here so you know a great late to work with with lots of rancour and
Reuben I'm so let's say we are we have
this proposed retrofit strategies here so you know this is a kind of retrospective type analysis but let's
just kind of rewind go back in time a little bit and envision if you were just
early on kind of getting this project started I'm starting to think about what we want to do our building to maximize
the value of the improvements that the
were limited and then I say would you mind putting yourself on you cuz I hear like a little bit of X as well be it
all right I don't hear it anymore so okay great sorry about that from the audience okay
so what I'm gonna do I'm gonna use planet impacts discovery analysis to
find some design options that are going to really reduce my energy use balance
added building cost and really lower my payback period or lower the time that
I'll see an investment on my on my Ontario return on my investment I'm
trying to lower this as much as possible so I've got my baseline existing Hotel
energy use over here so you know currently or you know before the
improvements we're at about maybe three hundred twenty thousand dollars in total
annual energy costs for the year oh and just noteworthy I am I'm gonna focus only on energy for this exercise
we do have water use as part of the tool if that is something that people on the call today are really interested about
I'm happy to to take you through it and a deeper dive if you want to request a
demo from our website but just know that right now energy is kind of going to be the main key of what we're looking at so
first up we run discovery the discovery analysis will look through all possible
design scenarios that you allow it to or within any constraints that you that you
define and so what we're first going to do is set a goal or an energy savings
goal let's just say 30% the tool by itself will already look for trying to
save as much energy as it can or trying to save more than just that 30% so I'm
going to leave that as the default that translates to an energy use intensity of 50 point three kbtu per square feet then
I can set a maximum payback period so this is the maximum allowable time which
I think my client would be and may be amenable to you know waiting for some kind of financial return but 20 years is
maybe a little bit of a long time frame I typically leave this as a default just because on its own the tool well
look for a planet impact we'll try to find strategies that reduce that payback period as much as possible so I'm just
gonna leave it as the default from now and then I'll say scroll down I can go
check out other aspects of the discovery analysis so I know with my window to
wall ratio on the North and South facade they're actually getting rid of some of
the windows that were up at the top here I can kind of see a my rendering that
you know we don't have those windows anymore so I'm just gonna reduce that down for my East and West facade we're
actually going to increase the glaze and just ever so slightly but it's this
point where I can you know just start to set some you know basic ranges for the analysis to look at so here at that of
our envelope building materials envelope settings and inputs mechanical setting
wise I'm just going to go into you know BRF our existing building had a PTAC
systems I'm so just choosing this verify got energy recovery to the bottom right
I can indicate whether a solar panel system it you know it's something that
I'm evaluating this particular project it's not something that we're looking at so I'm just going to select this off and
then I'll click run
also behind the scenes planet impacts going through all possible scenarios and
what it's going to do is kick out six or to kind of come up with six options that
fit some of the criteria that I that I had just sat in that discovery run so I
can see my discovery one has been successful let's go check out what some of those scenarios are
so as I scroll down yeah I've got discovery C 1 through c 6 these are
these are all the options that's come up with they don't actually look really pretty somewhat similar sometimes we get
suggested strategies or something that are you know really just vary as far as
as the results go but what we're looking at here in this column each of these options define our consulting energy use
intensity in this second column we're looking at the results of annual energy
loss so you know comparatively like let's look at this one discover AC one the outcome the
resulting annual energy cost is about one hundred forty-one thousand dollars
compared to three hundred nineteen thousand dollars you know that's significant savings that any building on I would be pretty
excited to see now to meet this you know
to get to these numbers the design strategies we incorporate are going to add one point five million dollars are
gonna cost about one point five million dollars and we're going to see a payback or the client the building owner will
see a payback in about eight point six years so which rules you know what what
kind of is contributing to those costs well using this table at the top this
you know we can see how each design strategy breaks down and impacts energy
use or energy savings and cost so the big hitter here the heavy hitter here is
definitely lighting retrofit just really improving on our lighting efficiency has
significant energy savings now our mechanical system just kind of
switching this out and mechanical systems are pretty expensive so you know we're definitely adding some some costs
there but you know through all of our strategies here you know we're we're significantly saving our total annual
annual energy use and really driving down our annual energy costs
so this proposed retrofit strategy here this is the kind of retrospective
analysis of what was actually done on this hotel so I think that the I think
the hotel is currently under the renovation is currently happening I think it's slated to be done sometime in
2018 just based on some particle size but you know we're with those with the
design changes that they've incorporated and the mechanical system replacement you know they're achieving they've
nearly halved their energy use in this building so you know that's really fantastic to see while adding 1.5
costing about 1.5 million dollars you know estimated by our tool this doesn't
incorporate again this doesn't incorporate the water fixtures replacement so this cost doesn't include
that on that's something that we would use our water use tool to do an analysis from that perspective but just from
building and mechanical or building envelope and mechanical improvements you know this is this is really great to see
as well as this significant decrease in annual energy costs so I will will dive
back in here and then I just want to do a quick a quick demo of clean quote
which is our project quoting platform clean quote is just quote clean fun calm
it's our online collateral and so you know after Allison's demonstration we
see that kind of one and a half give or take dollar amount that's associated
with with carrying out those projects so the owner then has a number of options right they can they can just pay for
that themselves they can go you know find some other capital to pay for that
in different ways that property owners and developers do and one of those can
be pasted because all of the eligible all the items are Allison was modeling are going to be eligible for for our
financing and so just kind of want to show you how that number that dollar number can slot
into putting together a paper puzzle and this can take just about a minute here
which I'll show you so the address for that property is 220 South Broadway
right there in Rochester Minnesota so again the first thing this does so jog if you look up tool make sure that it's
in an active and eligible paced territory which it is of course we knew that because we've already financed this
project but this is what you're gonna all you're gonna need to do to get a quick proposal for what financing
options might look like for your client for this efficiency retrofit project so
this is a hotel it's a hospitality property because it's not perhaps it downtown Twin Cities it's out in
Rochester of course the Mayo Clinic is there which is very exciting but not necessarily a primary market kind of the
big msas across the country this just helps kind of have better better pricing
for that specific project on the quote in the secondary tertiary markets so select that this information is not
require the property value and existing debt at this stage it can be helpful in
terms of identifying the maximum amount of pace but you might not have an information and that's totally ok so we
can just skip over that go ahead and call this the Hotel Indigo my keyboard
wants to respond in Rochester and because there are those soft costs and
water fixture low-flow water fixtures that weren't included in that one and a
half million we can bump it up and say it's say it's about two million dollars for example and that's going to be for
your energy efficiency water efficiency soft costs since it's not a total
redevelopment or repositioning it's just really a retrofit upgrade of an existing
building we'll select that we can say we're in planning again this is just information for us and say they want to
start August of this year and it's going to take about six months
February 2020 that puts us sure that's fine again this is just information for
us if you're working with specific vendors that we might already be working with you can enter that here and we can
also work you know if you have any preferred vendors that you think would like to use a tool again we can we can
work on that after this but that's where you put that if we had any you know existing discounted pricing etc if you
want to put some notes here in terms of what the project is you're welcome to do
that but that's all you need and we can submit and get a quote and so if you want to verify that the information is
all correct you can do that there and you can see that for the maximum term in
Minnesota is 20 years states like California we can go to 30 in many states the max is about 25 years you can
see what the the pricing options would look like and what the annual payment would look like one thing I do want to
note here is this is the pace amount that we had requested and you'll see
that the financed amount is a little bit higher pace is 100 percent upfront financing so that includes the principal
interest as well as closing fees which you'll see here our cost of doing business and capitalized interest which
is part of part of pace but the so the the closing fees include both both the
clean fund closing costs as well as the program so that programs cost of doing business in
terms of getting the assessment recorded but that all isn't included in in this
quote and what you can do from there is download a single a simple one-page PDF
quote and you can also invite people you can invite the owner directly just
provide them any you know an email to view the quote and even take a look at and complete the application which is
just a very simple next kind of set of information regarding the the property
and any existing financing environmental issues I might be outstanding etc and
that should take them with that information on hand again a minute to complete you can also invite a partner
or someone else on project team to have a look and that's the same thing just put their email on
there and they will get an automated email from the clean quote platform to
go ahead and view the quote so that is how you know these things might happen
together and again kind of coming back to the objective of why we're talking about pace even though you know we're
clean funder that are here to be you know the experts in the financing and
helping to structure that project with you know the client being able to know about it and even include it in the
proposal that includes your full design is can be very helpful in terms of being
able to to achieve that that optimal design and with that I want to provide
Brian some time here to really dive in and share some insights from from his
perspective kind of across the the pace process and the you know the efficiency
development process so with that Brian take it away thanks
man I appreciate that so you know from there these presentations that Vanessa
is then on on clean quote and we're clean friend comes from obviously there are other providers that are out there
and I just wanted kind of some nomenclature when it comes to pace you've got folks like a clean fun two or
capital providers directly when she mentions the word program we're generally talking about these are the
clean energy districts so there is a public/private aspects to pace to be
able to put it on the tax bill so funders like a clean phone will come in
and work with generally states like Minnesota has men pace which is a
statewide pace provider program Missouri for instance has a few show-me pace or
Missouri clean energy district Colorado has the new energy Improvement District
so each of these 35 states have been able in legislation for pace have their form of program and they work in an open
environment generally with multiple lenders and sometimes even banks get involved in that so in terms of project insights
myself at lark consulting really I've worked on the ground helping property owners and developers who are just in
that conversation about pace I've been at the forefront of you know working on that side of the deal but I
also have experience working with other government and private sector actors who are interested in other forms of clean
clean energy and as mentioned in this program today you know pace capital can be used to supplant generally mezzanine
you know in a complex stack but it's pretty flexible and you know if mezzanine is not a part of it and there's eb-5 money that's being put in
in addition to senior debt perhaps pace can take out a smaller portion of owner's equity and reduce that cost the
point being is that you know outside of senior debt that's generally going to see your lowest level of cost pace is
pretty competitive right now you're going to see normally somewhere between 500 and 700 basis points for a pace deal
before we include rich nations so it's pretty competitive and it really has to
do with you know the types of improvements that are being done another thing I want to mention about pace to
touch on that Vanessa brought up is the most states do you have a maximum term in terms of whether that's 10 years 25
or 30 so that's usually a statutory limit but it's also additionally kind of
limited to the max weight of the improvements of the better being put it so generally to make this easy
understand if you've got a building thermal envelope that has you know a useful life of on average 20 years you
can finance after 20 but if you do an HVAC system that has a 12 year useful
life you might be able to punch that up to 15 but you're not going to be able to amortize it out over 20 so I just want
to kind of throw that out there so kind of jumping in there's really four areas of folks that I think and there's more
there's various shades of design professional I think that can benefit from pace and the intersection of what
planet-- impact involves in terms of design professionals you know it's been mentioned a lot today I really do think
that you know value engineering has been kind of excuse my language here bastardized term it's really being used
to like look I've come up against my I'm an owner and I'm coming up against my constraints maybe I'm working through a
difficult entitlement process budgets come down perhaps an incentive that we
were banking on didn't didn't pan out value engineering now becomes what can we toss out and still really be able to
do this program when you have clean fun than something like planet impact the tool when you're
able to kind of visualize I think and look at not only the upfront cost but
see the kind of lifecycle lifecycle cost of what various clean energy measurements are earlier in the design
process you can turn value engineering from removing into kind of how do we build and curb this into it and in
effect use it as a way as a cost hedge and I think we've done that in a few
ways one is our through kind of be measured and verified cost from a benchmark kind of here's how a building
would perform here's how it will perform if you Institute these these measures and then there's also kind of when you
couple it with pace in that case you're seeing a financing component reduction in cost which we did mention this in the
preview but you know pace operates kind of in the same way that senior debt does and that the interest is largely
tax-deductible so it really is tax dependent on the kind of marginal tax rates of the entity that's using pace
well but that's something to explore and understand that in addition to the clean energy component you're getting kind of
financing savings too so there's really design professionals I think are able to
tell a better story about what value engineering actually can mean as we have new types of technologies like passive
house I know in Kansas City for instance that's being put to the forefront where you're seeing kind of that european
standard of incredibly robust passive design which means more focus I think on
the building thermal envelope and less on mechanicals hence the passive of building that into
kind of moving that from being a kind of would like to have into financing that
as the norm so I think that things like pace and clean impact can tell the value proposition of things like passive house
much earlier that so developers and there tractors can better understand how they
can convince lenders and underwriters that this is its financeable it helps pay for itself as I just mention I think
developers and property owners or another cadre that really you know as
they're trying to put pencil to paper and understand what their cost is going to be often the hard costs are the
biggest ones you know generally owner's equity is covering a number of soft costs in terms of energy modeling and
architectural design and engineering services so there's not generally a lot of money left over in terms for hard
hard things you know at the end of the day developers and property owners want to build what will generate a low
vacancy rate and a high a high rental per square foot I think that we with
pace and clean and planet impact can tell a story where these things that normally would probably especially a
repositioning might be a large capex expenditure anyway in our years of a hold period could be taken care of
upfront now and I think can pay for themselves the other power of pace it is
not required but since it is structured as assessment versus and alone and it
can travel what the property is that that can be negotiated and assumed in a sale so you may take a 20-year term out
on an improvement and on hold the property for five years and you have two
options here rather than with a loan where you're left with one you have to negotiate a sale where a price has to
reflect the you know expenditure you made earlier in your whole period now you have the opportunity not only to
sell it but to negotiate that assumption and that obviously helps spread out the cost of that between two owners so again
another point that kind of gives pace initial tool at school box and we think is helpful we'll go the next slide in
terms of underwriters and lenders I think they're obviously a strong component to this you know they're
seeing complex capital stacks already I mean we're seeing four or five six things fact we have monetization of
historic tax credits low-income housing tax credits there are some that aren't
directly in the stack but you know investor tax credits that taken out on the on solar projects and
things like that underwriters and lenders need to understand that their position which is generally going to be the largest and
stack right anywhere between 50 and 60 percent of the total development costs they really want to know that anything
else that's coming in there with them either adds to the strength of the project to perform or at least provides
a de minimis risk but they can kind of work with and so this is really their
planet impact I think can help better illustrate where financing whether it's
done with that bank debt or it's done with pace you can see much more early in the process
how bank financing can work with others in the cap to get this project done and
and it was mentioned that pace is done as a bond issuance that is true in some form and fashion especially on larger
commercial projects but it can also be done without the issuance of bonds where
you just have direct capital injections and so I want to know the pace in and of itself is what can generally reflect a
number of different vehicles and security instruments but at the end of the day you do need that public partner
in order to make sure it is paid back through the tax bill consent management is something that's been mentioned in
here underwriters and lenders are generally messy with pace pace as any
other special assessment is largely in a superior position it is not Excel or
bold however so you kind of have a security instrument where only the amount due and payable each year is ever
what can be and accelerated you can't take future amounts of pace and if
there's a default on that column doing payable today unlike senior debt which can be so there is a level of managing
consent between a senior lender because they obviously want to protect their their preservation in the capital and
the collateral that's being used which is generally the building so pace base lenders have incredible experience
working with that and I can cite clean fun does a great example they almost
virtually can get consent on each time and they do that by being able to tell the story of how what their financing
isn't proving the cash flow and the net operating income you can show a lender that and you can back it up
and tell that story by and by they're generally okay with with going forward
that doesn't mean there's not the occasion where it doesn't make sense and they won't provide consent but that's
the exception not the rule generally and then lastly I think the the biggest component and it's not any different I
think than packaging here in financing or using tax credits is local government involvement plan and impact really I
think can help change the game in terms of helping with the entitlement process
by being able to early and show how projects can perhaps maybe rely less on public incentives and can use their own
internal net worth and equity to pay for themselves and then use make public
incentives to stretch out that project at the end of the day I think it's
important I'm not going to read through all these but you can see that local governments in terms of helping to
integrate and have a discussion about how do these projects work with other economic tools at the end of the day
Planet impact is really I think a game changer and helping funders like clean fund or a debt provider what the US bank
or UMB and obviously the property owners and developers on the ground helping
them to understand very early you know obviously some of these projects have 30 month to 36 months lead time before
we're even talking about hitting the breaking into the ground it's much easier to have a conversation when it's
cheaper and earlier to scale in the earlier process than it is to wait to get closer to trying to complete
entitlement and then trying to you know crash and add energy efficiency into the discussion so there's a I do want to
remind that I'm going to kind of finish with that and I'm glad to answer questions as we move couldn't turn it towards the Q&A there is a Q&A function
you can find there on your controllers if you want to go ahead and type some in and with that I'm going to go ahead and
pass it to Vanessa it kind of opened up the floor to questions
great thank you we do have have some kind of an in regard
to kind of as Brian I just mentioned about you know historic tax credits etc
and other incentives how pace works with tax credits rebates and incentives etc
so with things like tax credits those are ultimately kind of layers within a capital stack on
a project and so again that's just that has to do with the overall structure of the financing overall on the project and
pace can absolutely be in that that dallas project that i showed how has your tax credit capitalized on the stack
and then in terms of incentives and rebates you know whether that's local or
state or federal cetera that's essentially just additional savings to
the owner you know we're financing the improvement project and if they're gonna be getting you know a value that's just
additional savings to the property owner and one here for for you allison just in
terms of who you see being the primary users of planet impact i've been kind of
at what stage in a project yeah that's a
great question so i think we see a you know the the tool is set up to be very
collaborative actually there was I think in my demo I forgot to kind of point out the team the team section of a project
where you can actually add team members based on their email address to your project we TCS being kind of a very
collaborative workflow as far as who is owning the project and really kind of driving the project in planning compact
forward we do see that currently is being the architect but I think we'd see
like if a building owner kind of knew about to an impact or your knew about
planet impacts you know about this easy way to find finds really the the biggest
bang for their buck kind of strategies in reducing energy use and really
maximizing value long term and they wanted to kind of own the project and
delegate and architect in kind of an engineer that they're working with to kind of work through the actual no data input and
running up the analyses and we kind of see that being you have somewhat of an optimal workflow as well great thank you
one more and then we're gonna have to wrap up here is please the only type of
finance that is compatible and getting a lot of feedback and I know that okay so
that's that's a great question that's so that we we discussed ultimately you know
paces one form of finance and it is very
compatible and in alignment with the types of projects that will be modeled and our model of on planet impact but it
is not you know ultimately there they are they are valuable in and of themselves you know not not every
program across the country requires modeling but as Brian I think very very
you know concisely stated that being
able to use the numbers in terms of the savings and the dollar savings and
communicating the story of the project and the value driven through an
efficiency project to a lender the bank lender ultimately is incredibly
important in so I think that ultimately you know being able to use use plan
impact to be able to not only understand the value and the cost analysis of the
project but also be able to use that in in discussing kind of the financial story is incredibly powerful but again
piece and and planet impact our have a lot of alignment and are working to to
achieve you know projects that deploy efficiency and make the built
environment you know more more resilient and sustainable but at the end of the day you know we ultimately are not
exclude you know necessarily required on there respective projects though as we hope
you gleaned from today's session there's a lot of value that can be driven by by using both of them and just wanted to
provide the resources here to say you know as you're designing and developing
efficiency projects plan impact is a great platform to be able to model that and see not only just just the technical
components but also the cost analysis components and as you are presenting a project that dollar value the project
cost one way to think about it is to you know look at pace financing and there's
some easy resources there clean quote to be able to have an immediate kind of proposal you can slot in just as a
conversation starter regarding financing options - to make these projects happen so we are right at the hour here but I
wanted to thank everyone for for the time today and again we'll be sending a recording and slides around later today
all right thanks I'll take care all
right thanks everyone