C-PACE for New Construction February 14, 2017

Panelists Brian McCarter: CEO Paul Scharfenberger: Director, Finance & Operations Chairman, NEID Beau Engman: CEO Keirstin Beck: Principal

Session Topics Emergence of C-PACE for New Construction (NC) Value Proposition Eligibility Requirements Case Study: CO C-PACE Panelists Perspectives Brian: Program administrator Paul: State government Beau: Project developer & capital provider Keirstin: Owner’s rep. & consultant Audience Q&A

Emergence of C-PACE for New Construction C-PACE legislation in many jurisdictions supports NC C-PACE projects to date concentrated in Existing Building sector C-PACE programs now evolving to include NC NC sector eligibility methodology differs from Existing Building CO C-PACE NC methodology as case study

Emergence of C-PACE for New Construction Existing City / County Programs with NC Project Closings Milwaukee, WI: 1st NC project closed in Oct 2016 Pulaski County, AK: 1st NC project closed in Nov 2016

Emergence of C-PACE for New Construction Existing Statewide C-PACE Program with NC Project Closing 1st statewide program to apply C-PACE to New Construction 1st NC project closed in Nov 2016 10 NC projects in rapidly growing pipeline $296 million estimated total eligible construction cost (TECC) $44 million estimated C-PACE eligible financing amount (15% of TECC)

Emergence of C-PACE for New Construction “Coming Soon” County & Statewide Programs with NC Multnomah County, OR: planned launch in Mar 2017 Arlington County, VA: planned launch in Apr 2017 State of Rhode Island: NC launched in Feb 2017 . consistent with CO NC ….

Owner / Developer Value Proposition Achieve higher building performance at lower cost vs. traditional financing Integrate improvements often “value engineered” out of projects Reduce equity contribution Lower construction loan amount No personal guarantee

Eligibility Req’s: CO C-PACE Methodology Determine Total Eligible Construction Cost (TECC) Eligible TECC: general building construction & C-PACE transaction costs Non-Eligible TECC: site acquisition, environmental remediation, off-site infrastructure Model building energy performance at “Code Compliant” & “As Designed” Determine % “As Designed” performance exceeds “Code Compliant” Example: “As Designed” performance exceeds IECC 2012 energy code by 15% Determine C-PACE Eligible Finance Amount Qualify for 15% to 20% of TECC based on performance % above code

Colorado NC Project Case Study

State Govt. Perspective Paul Scharfenberger: Director, Finance & Operations Chairman, NEID C-PACE for NC advances public policy goals without govt. mandates Structured approach, including independent review/approval of modeled building energy performance “above code”, is critical Priority is to balance simplicity and ease of use with prudent oversight and verification to ensure success and replicability

Project Developer & Capital Provider Perspective Beau Engman: CEO 2016: completed 4 NC projects in 3 PACE programs, Key Considerations: Performance over code baseline Program compliance Very long development timelines Integration with design teams (GC, Architect) Impact to construction costs Sloans Lake MF: 56% Savings $2.8m Investment Westin Hotel: 44% Savings $6.8m Investment Office: 28% Savings $2m Investment

Owner’s Rep. / Consultant Perspective Keirstin Beck: Principal Additional financing options for NC is welcomed, especially when they can ease equity requirements Long term nature & transferability of PACE is attractive Economic exercise to evaluate if project can support PACE assessment Market considerations: Impact on project CAM charges versus market CAM charges In programs like CO, when jurisdictional code requires less efficiencies, could support larger PACE financing amounts

Audience Q&A Panelists Brian: Program administrator Paul: State government Beau: Project developer & capital provider Keirstin: Owner’s rep. & consultant