PACE P ROPERTY A SSESSED C LEAN E NERGY National League of Cities Congressional Cities Conference March 15, 2011 David Gabrielson Executive Director PACENOW Coalition

T HE B IG P ICTURE 40% of our Energy is Used in Buildings 21% Unemployment in Building Sector $500 Billion Net Savings from Energy Efficiency by

T HE I NTRO ……….T HE A SK Benefits of Energy Efficiency & Renewable Energy PACE Basics – a quick review FHFA July 6 Statement PACE Commercial Bi-Partisan Legislation to restore PACE

T HE P ROMISE OF PACE PACE is Property Assessed Clean Energy Jobs Permanent Local Diverse Skills Energy Independence Middle East Avoided Costs Power Plants Transmission $ Savings Owners Energy $ Hedge Rising Fuel Costs Threat to Mortgages Cleaner Air Environment Voluntary Only if Needed No Subsidies Requires NONE

H OW PACE W ORKS 1)State enabling legislation establishes public purpose Energy Conservation Goals Jobs Avoided Costs Environment Fuel Hedge 2)Local government creates public benefit district Establishes public purpose Energy conservation – Climate Action Plans Jobs Taxpayer relief Fuel Cost Hedge

H OW PACE W ORKS 7 Dec 1736 Opt-In Fire District

H OW PACE W ORKS 3)Municipality establishes program guidelines Audit shows money saving measures Positive Equity – No Underwater Mortgages Taxes Paid on Time No Defaults or Bankruptcies 4)Building owner opts-in Voluntary 5)Municipality Provides Financing 6)Municipality Assessment Charge Only Participants Pay

PACE SOLVES THE B ARRIERS Uniquely Powerful Initiative

PACE The Good News

24 S TATES IN 24 M ONTHS State Government Majority When PACE Legislation was Passed Majority Republican Majority Democrat

S O T HEN W HAT H APPENED ? The Bad News

FHFA J ULY 6 TH S TATEMENT PACE assessments are invalid FHFA has NO Authority to Define Public Purpose 37,000 benefit districts and 100+ years of precedent PACE is Dangerous for Borrowers $$ Saved Helps Pay Mortgages Efficient Homes are Worth MORE PACE Protects Against Oil Price Shocks Experience is the Exact Opposite Sonoma County – 1,300+ Projects - $42 Million – 1 Default Babylon, NY – 650+ Projects - $6.5 Million – 0 Defaults

FHFA J ULY 6 TH S TATEMENT Assessments are a Senior Lien Only to homes with positive equity If every home has enough equity – NO losses to anyone PACE assessments do not accelerate on default Only portion in arrears is senior Efficiency and Renewables increase home values Appraisal Journal study – $21 to $1 of annual fuel reduction

PACE IS G REAT FOR T AXPAYERS PACE is a Burden on American Taxpayers PACE is Great for Taxpayers

A SK Y OUR M EMBERS OF C ONGRESS Support Bi-Partisan Legislation to Restore PACE Residential

PACE C OMMERCIAL FHFA NOT Involved Senior Lien Status is Negotiated with Existing Lender Greater Diversity…… Potential for Huge Savings Small Businesses….. Similar to Homes Large Buildings Shopping Centers Major Programs Initiated Washington, D.C. Greater Cleveland Los Angeles San Francisco Many others…… New York, Michigan, Florida, Missouri

PACE B ENEFITS Benefits to Our Nation Creates permanent jobs - nationwide and across a range of skills. Uses private capital for funding – NO taxes or government subsidies. Saves owners money – lower operating cost make their buildings more valuable. Promotes energy security - without federal regulation or taxes that drive up energy costs. Avoids costly power plants – increasingly difficult to site. No budgetary impact - voluntary participants pay all fees and expenses. Benefits to Municipalities Permanent local jobs – estimated at 10 per $1 million in spending, makes communities stronger. No debt or credit risk - bonds are secured solely by the assessment payments of opt-in participants. Saves money for residents - PACE is the only assessment that creates positive cash flow. Voluntary participation – building owners opt-in if they decide benefits warrant. Improves air quality – reduced exhaust makes communities healthier.

PACE B ENEFITS Benefits to Property Owners No upfront cost - PACE financing spreads costs over the life of improvements. Owners save money - programs are designed to ensure annual savings exceed assessments. Assessment transfers upon sale - new owner benefits from improvements that stay with the property. Safety - assured by best practices and guidelines established to protect all program participants. Broad applicability - residential and commercial properties can use PACE. Voluntary - only opt-in participants pay assessments (and benefit from improvements). Comfort – efficient buildings are healthier and more comfortable. Benefits to Existing Lenders Lowers default risk – improved cash flow makes it easier for owners to pay mortgages. Improves Loan‐to‐Value Ratio - buildings that are less expensive to operate are worth more. Safety and soundness - best practices framework developed to meet all participants’ concerns. Lien risk minimized - non-acceleration of assessments in default limits senior lien PACE exposure to about $100 per home on average.