Energize NY PACE Update October 4, 2017 Sarah Smiley - Energize NY Director of Member Services Mark Thielking – Energize NY Executive Director

EIC Energy Improvement Corporation Not-for-profit, Local Development Corporation Mission to increase clean energy adoption across NYS Controlled by member municipalities Shared service structure Funded by NYSERDA, US-DOE, revenue from financings Serve property owners with services through Energize NY Investment in local economy Supports local business stability and expansion Supports Property Values: well maintained buildings with low energy costs are more attractive to buyers and potential employers Spur job creation and increased opportunity in engineering, architecture, HVAC and renewable energy Support healthier, livable communities by reducing emissions and pollution

Public Benefits: Services authorized by local municipalities to achieve a defined public benefit: Water + Sewer Infrastructure Fire and Police Sidewalks + Roads Public Lighting PACE Finance to support energy related improvements to buildings Commercial.EnergizeNY.org 3

Clean Energy Public Benefits Property Assessed Clean Energy (PACE) “Municipalities would fulfill an important public purpose by providing financing to property owners for the installation of renewable energy systems & energy efficiency measures.” - Article 5L of the NYS General Municipal Law Repayments collected by municipality via tax bill charge By Darwinek [CC BY-SA 3.0], via Wikimedia Commons Energize NY Finance is NY State’s Commercial PACE program EIC’s Local Development Corporation structure allows for simplified state wide adoption of Article 5-L: Aggregated Capital Sources Legal constructs; capital structure tested and operational Funded reserves + credit facilities Joint marketing and outreach No cost to participating Municipality Same state wide facility Combines strength of NYS’s Tax Laws and LDC structure

Energize NY PACE Finance Benefits Property Assessed Clean Energy (PACE) = alternative, affordable financing Up to 100% of the cost of solar and energy efficiency projects of all sizes Eligibility is not based on traditional credit metrics, but on the building’s ability to carry the extra tax charge and generate positive cash flow from reduced energy costs Is repaid through an annual charge on the tax bill for the property over the term of the loan Automatically transfers to new owner if the property is sold Flexible customizable loan terms up from 5 - 20 years Competitive interest rates (4.75% to 6%)* depending upon market conditions and even lower rates for not-for-profits located in Westchester County. Property Assessed Clean Energy (PACE) Finance = alternative, affordable financing for renewable energy and energy efficiency upgrades to buildings PACE provides another capital source to achieve building upgrades PACE is NOT a bank loan The use of PACE is tied to the financial value and health of the building. The improvements stay with the building, and the “loan” remains with the building for the length of the financing *Rates as of 7-24-2017

Eligible Building Types Commercially-owned buildings Multifamily Healthcare Hospitality Industrial Warehouse Not-for-profit Office Retail Agricultural Institutional Private colleges

Eligible Improvements Renewables: Solar PV, Solar Thermal, Geothermal, Wind Efficiency: Lighting, Boiler Conversions, Furnace Upgrades, Insulation, HVAC, Chillers, Windows, Pumps, Smart Controls

Energize NY PACE Projects Lead NYSERDA Multifamily Partner Customer Scope of Work Fuel conversion Boiler Hot water heater Pipe insulation Lighting Windows

Energize NY PACE Projects Lead Southern Tier Solar Works Scope of Work Façade-mounted Solar PV

Energize NY Active + Closed 31 Projects, Building Type – $6.670m

NYS PACE NEWS Article 5-L Amendments (Requires Amended Local Law + Muni Agreement) 10% Cap Removed Community Solar/Remote Net Meter projects allowed Access to non-federal reserves: All NYS Counties / Cities may participate New NYSERDA Commercial PACE Guidelines Annual Savings test moved to cumulative Savings Investment Ratio of SIR > 1 (Requires Amended Local Law + Muni Agreement)

NYS PACE Technical Guidelines NYSERDA has issued guidelines to allow project developers to qualify projects a) Cumulative Savings Investment Ratio of SIR > 1 b) Three Technical Pathways for PACE: NYSERDA programs: NYSERDA programs for energy audits and/or feasibility standards Utility and LIPA programs NY State Commercial (C-PACE) Guidelines Responders establish and utilize their own process for complying with the NY State C-PACE Guidelines. EIC will review and approve responder’s proposal as a condition to qualification EIC will collaborate to develop quality assurance review https://www.nyserda.ny.gov/cpace-guidelines

Energize NY PACE – Additional Innovations Energize NY Finance will accept Power Purchase Agreements (PPA) The Solar Project Owner agrees to sell solar power to the Property Owner through a long term contract called a Power Purchase Agreement or “PPA” ITC Linked PACE Capital Short Term Capital that is paired with Federal ITC and/or Depreciation Tax Benefit payments AND a long-term PACE Financing PACE Construction Phase Capital Construction Phase Capital that is paired with Long Term PACE to create a seamless clean energy finance process < available in phases starting in 2018

EIC RFQ EIC seeks to encourage the development of clean energy projects in New York State, especially within our Member municipalities. http://commercial.energizeny.org/rfq EIC would like to leverage our PACE facility and is looking for project developers to bring multiple projects on a large scale. Responders will need to demonstrate the ability to complete $3 million of financing annually, and $5 million annually for those choosing to use their own capital. Large scale experienced developers who don’t need EIC to help prepare and document a project prior to financing. And/or developers who run their own projects and provide their own capital.

PACE Pairs with NYS Clean Energy Initiatives Property Assessed Clean Energy (PACE) pair with: Utility Programs – 100mm+ of annual incentives related to electricity and gas efficiency improvements, demand management, small business, NYSERDA Programs, Efficiency: Financial Assistance related to geo thermal, agriculture, new construction, multi family, commercial and demand management programs NYSERDA Programs, Renewables – Financial Assistance for solar (NY Sun), wind and storage (soon) Empire State Development - economic development agency of NY initiatives provide assistance specifically for building revitalizations in the urban core sections of NY State that can include energy improvements.

Energize NY Services: Energize NY Partner support Energize NY Trainings Property owner support NYSERDA + Utilities Finance Application support Municipal Member support PACE Finance support Pair PACE to building code initiatives Pair PACE to economic development initiatives Pair PACE to grant opportunities   Troy waterfront CC-BY-SA-3.0/ Matt H. Wade at Wikipedia

Contact information Mark Thielking Executive Director 914-302-7300 x8109 mark@energizeny.org Sarah Smiley Director of Member Services 914-302-7300 x8105 sarahs@energizeny.org Susan Morth Director of Business Development 914-302-7300 x8114 susanm@energizeny.org

APPENDIX Finance Criteria Estimated annual energy savings from improvements must be greater than annual finance payments Improvements have savings-to-investment ratio > 1 Commercially or Not-for-Profit owned property Property’s existing loan-to-value is no greater than 80% Financing up to 10% of value of benefitted property No bankruptcy within last 7 years At least 3 year history of timely property tax payments Existing lender consent required NYSERDA/Utility energy assessments and verification

APPENDIX ENY Finance Process Action Timing 1. Submit on-line Pre-application Receive conditional reservation number Obtain an appraisal if needed 2 business days b. Client dependent 2. Scope of Work Technical review NYSERDA/Utility program/contractor 3. Submit Finance Application Title search Lender consent if needed Organizational documents ENY internal approval process Sign and return Finance Agreement documents Notice to Proceed 7-10 business days Client dependent 15-20 business days 1 business day 4. ENY disburses capital Certificate of Completion or equivalent a. Completion date dependent