manufacturing in america 2016 pace presentation

A Paradigm Shift in Funding

Energy Efficiency and

Renewable Energy Projects

Presented

By:

"An Energy Solutions Company"

PACE Financing

Limited

Capital

Long Payback

Periods

Risk

Savings

The Answer?

PACE Property Assessed

Clean Energy

Financing

What is PACE?

• Non-Recourse financing program for

for energy efficiency & water

conservation projects

• Voluntary property improvement tax

tax assessment utilized for energy

efficiency improvement projects

• Based on one of the oldest property

improvement financing models in the

U.S.

What is PACE? • Legislation enacted by State of

Michigan (Public Act 270 of 2010)

• Adopted by local governments

including counties, cities, and

townships

• Provides long-term, fixed rate funding,

repaid as a property tax

• Savings must be greater than cost and

includes maintenance & end of life

replacement costs

Where is PACE? • Originated in California in 2009

• Adopted in 32 U.S. States and the

District of Columbia

• Has expanded into other countries

Where is PACE? • Enacted by Michigan in 2010

• First PACE District City of Southfield

• First project in Michigan completed in

2014 – MPSC Building Owned by

Saginaw Plaza Limited – HVAC & Solar

Where is PACE? 26 PACE Districts Established

Multiple Projects Completed

Why PACE?

Non Recourse

Property assumes debt, not property

owner

Transfers with property upon sale, does

not require payoff

Must be cash flow positive over

assessment term, covers 100% of costs

Projects > $250K require performance

guarantee based on assumptions

Does not affect property owners credit

or borrowing power

No up front capital required 100%

of all costs covered

Provides long-term, fixed rate financing

through assessment

Term lengths up to 20 yrs or more

Increases property value, real property

improvement not personal

Why PACE?

Can be utilized multiple times on same

property

Savings & ROI includes maintenance

and end of life replacement costs

Covers “real property” assets including

including items like electric vehicles

Assets must remain with the property if

if sold, can also be transferred

Why PACE?

Who Funds PACE?

Michigan PACE statutes allows PACE

projects to be financed through a

variety of sources

Private Equity

Self Funding

Traditional Funding

Bonds

Amount available for a PACE project is

dependent on several factors and can

range from 20% to 30% of the properties

FMV

1) Property Value

2) Mortgage LTV

3) Annual Energy Spend

4) % of Value by Lender

5) PACE District % of Value

How Much is Available?

Businesses in approved PACE Districts

For-profit and non-profit businesses

Government owned do not qualify

Business is in good standing

Business outlook is good

Property not leveraged (< 80% LTV)

Who Qualifies for PACE?

Projects > $250K

Smaller projects can be funded

Only used for energy efficiency projects

Don’t own it? Get permission!

Who Qualifies for PACE?

What Technologies Can be

Financed Through PACE?

Projects That Qualify…….

Facility Upgrades

New Construction

Process Improvements

Refinancing of Prior Projects

Incentives

Tax Credits

The Success of PACE

PACE Project Overview

Upgrade Facility, Replace

Process Equipment, Improve

Energy Efficiency

Reduce Energy Costs

Reduce Maintenance Costs

Improve Net Operating Expense

Incur No Out of Pocket Costs

Project Objectives

• Manufacturing Facility

• All Original Equipment

• $809K Total Project Cost

• 20 Year Assessment

• Includes Annual Energy & Inflation

Rate Adjustments

• Includes Maintenance and End of

Life Replacement Costs (M&L)

Proposal Overview

Replace Processing Equipment

Install LED Interior/Exterior

Lighting

Replace Heating System

Install Air Stratification Fans

Install Controls System

Project Scope of Work

Install Hi-Speed Entrance Doors

Install Rooftop Solar Array

Install Solar Skylights

Install VSD Compressed Air

System

Project Scope of Work

Proposal Assumptions

1) Cost of Energy ~ $0.132 Per Kwh

2) Includes Incentives

3) Cost of Capital 7.5% Fixed Rate

4) 20 Year Term

7) 2% Annual Energy Cost Increase

8) 5% Annual Inflation Rate

Proposal Assumptions

9) Includes Maintenance and End-of-Life

Replacement for PACE Term

10) Includes All Material and Labor

Annual Electrical Reduction 78%

Annual Gas Reduction 25%

Annual Cost (Current) $115,348

Annual Cost (Proposed) $31,905

Annual Savings $83,443

Annual Assessment Payment $78,204

Annual Net Savings $5,239

Proposal Summary

Lifetime Savings (20 Year) $1,668,876

Lifetime Cost (% of Savings) 94%

Lifetime ROI (20 Year) 7%

Proposal Summary







Annual Savings…

Proposal Summary







Is Greater Than Annual Cost……

Proposal Summary







Which Improves Cash Flow!

Proposal Summary

Proposal Financial Summary

Year 1 Includes Incentives Resulting in

Cash Back & Large ROI

Proposal Financial Summary

Cash Flow Positive From Day 1!

Booth 409

2nd Level Atrium

Mfg in America 2016

PACE Report

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