1. © 2014 Bricker & Eckler LLP J. Caleb Bell, Partner Bricker & Eckler LLP 100 South Third Street Columbus, Ohio 43215 Using PACE Programs to Meet Community Development Goals

2. © 2014 Bricker & Eckler LLP PACE  PACE = “Property Assessed Clean Energy”

3. © 2014 Bricker & Eckler LLP Ohio’s PACE Law  ORC Ch. 1710 provisions allow municipalities and townships to work with property owners to provide up-front, assessment-based financing for property owners that want to install their own alternative energy improvements  Ohio’s law modeled after the success of Berkeley, California’s FIRST (“Financing Initiative for Renewable and Solar Technology”) program  31 states/territories have authorized PACE laws

4. © 2014 Bricker & Eckler LLP Ohio’s PACE Law  Energy SID – A special type of financing district created under ORC Ch. 1710 for the purpose of financing: –Solar photovoltaic (i.e., roof-top and ground- mounted solar arrays) –Solar thermal systems (i.e., solar water heating systems) –Geothermal –Wind –Biomass –Gasification –Energy efficiency improvements

5. © 2014 Bricker & Eckler LLP Ohio’s PACE Law “Energy Efficiency Improvement” is given a special statutory definition: “…energy efficiency technologies, products, and activities that reduce or support the reduction of energy consumption, allow for the reduction in demand, or support the production of clean, renewable energy and that are or will be permanently fixed to real property.” “Reduction In Demand” means: “…a change in customer behavior or a change in customer- owned or operated assets that reduces or has the capability to reduce the demand for electricity as a result of price signals or other incentives.”

6. © 2014 Bricker & Eckler LLP PACE Financing

7. © 2014 Bricker & Eckler LLP PACE Financing: Energy SIDs  Energy SIDs are available for residential, commercial, industrial, nonprofit and government property  Petition(s) by property owner(s)  Legislative approval by local government  Noncontiguous “districts” are permitted  A property owner cannot be compelled to join an Energy SID

8. © 2014 Bricker & Eckler LLP PACE Financing: Flexibilities  PACE can be a tool added to other tools used in a project financing  PACE can be utilized on a single parcel or a single campus; PACE need not be city-wide or district-wide  PACE could be a project financing tool for any large user of power with deferred maintenance such as: -Commercial properties -Manufacturers -Colleges and universities -Hospitals -Municipal, county or township properties

9. © 2014 Bricker & Eckler LLP PACE Financing: Special Assessments  PACE bonds/loans are secured by special assessment revenue constituting payments from property owners in installments for a defined period of years  Political subdivisions and PACE districts can cooperate to: –Issue revenue bonds secured by special assessments –Incur loan obligations secured by special assessments –Fund revolving loan funds with special assessment payments  Ohio’s PACE law permits special assessments that run for up to 30 years

10. © 2014 Bricker & Eckler LLP Advantages of PACE  PACE financing structures offer significant advantages over other financing options, including: –Zero up-front cash investment –Long-term fixed-rate financing –Lower interest rates –Lien priority for delinquent PACE assessments –PACE assessment stays with the property upon sale –Ability to pass PACE assessments through to tenants –Higher rents and greater long-term property values because of energy efficiency –Preservation of borrowing capacity through off-balance-sheet financing

11. © 2014 Bricker & Eckler LLP ESID Trends in Ohio: Formed  Northwest Ohio Advanced Energy Improvement District: One of the largest PACE programs in U.S.; Toledo Lucas County Port Authority  Cincinnati PACE District: Greater Cincinnati Energy Alliance and Port of Greater Cincinnati Development Authority  Lake County PACE: Great Lakes Mall project  Northeast Ohio Advanced Energy District: Cleveland & first suburbs  City of Beachwood PACE District  City of Hilliard PACE District: Timberline office park project  Boardman Township PACE District: Southern Park Mall project

12. © 2014 Bricker & Eckler LLP ESID Trends in Ohio: in Progress  Central Ohio PACE District: Columbus Franklin County Finance Authority  Dayton Regional PACE District: Dayton Montgomery County Port Authority and Citywide Development Corporation  Energy Loan Loss Reserve Program: ODSA is working in Partnership with eligible Port Authorities to provide financing reserves. Toledo Port is the Master Escrow Agent.

13. © 2014 Bricker & Eckler LLP Great Lakes Mall  $3,375,000  Port Authority + ESID + City  Owner of Great Lakes Mall requested special assessments on main mall parcel  Energy efficient roofing and 10 HVAC systems  Mall tenants with triple-net leases obligated to pay proportionate share of tax bill and operating expenses  Transaction was win-win: –Mall owner gets cost recovery for capital improvements –Mall tenants have lower costs (energy savings vs. tax bill)

14. © 2014 Bricker & Eckler LLP Toledo Port Authority Large Industrial, Office, Warehouse Facilities  $3,894,000  Remote building energy management & data tracking systems; tenant energy savings projects Projects / Energy Savings:  Airport terminal & office – 30%  Train station & office – 15-20%  Downtown office – 45%  3 Parking facilities – 43%  3 Tenant facilities – 20-30%  Total energy saved: 2,938,000 kWh & 47,000 Ccf  Seaport terminal, warehouse and additional tenant facilities under review

15. © 2014 Bricker & Eckler LLP One Maritime Plaza  $1,055,000 – 15 yrs.  Top to bottom retrofit and equipment retro- commissioning –cooling tower, envelope repairs, total lighting replacement, overhaul HVAC and controls  Resulted in 30%-45% electricity reduction, tenants retained – 95% occupancy, building comfortable

16. © 2014 Bricker & Eckler LLP City of Toledo  $5,457,000 – 15 yrs.  Complete comprehensive building energy audits and implement multiple energy efficiency measures over several years. Hired energy manager to monitor projects and capture and measure energy data  Implemented multiple energy improvements for lighting and HVAC to 57 buildings; over 2,000,000 sq. ft. of buildings 2,685,000 kWh (20%) and 730,000 CCF (11%) saved in office buildings

17. © 2014 Bricker & Eckler LLP City of Toledo (continued)  19 Fire Stations, Maintenance and Training Facilities  3 Police and Safety Buildings  6 Community & Senior Centers  Health Department and Municipal Court – large prominent downtown buildings  Environmental Services Building  2 Water Treatment Facilities – large high energy use industrial campus locations  6 Transportation, Streets, Water & Sewer Maintenance Facilities, and 5 Miscellaneous Buildings

18. © 2014 Bricker & Eckler LLP 405 Madison – PNC Bank Building  $448,000 - 15 yrs.  1932 Limestone – Art Deco; Former OI HQ. 327,045 sq. ft. – 27 story  New 5 module / dual compressor chiller  Conservative 412,040 kWh annual reduction – sets the stage for Phase 2 lighting and building controls upgrade

19. © 2014 Bricker & Eckler LLP Timberline  $926,000, part of overall $4.5 million financing  ESID + City + Owner’s Lender  Energy efficient roofing and HVAC systems  Special assessments pledged as additional security for loan; if owner makes all loan payments, no special assessments are due  Transaction benefits everyone: –Energy savings allow cost recovery for capital improvements –Lender gets additional security for PACE portion of the overall financing –Owner gets lower interest rate due to additional security

20. © 2014 Bricker & Eckler LLP PACE Financing for Commercial Buildings

21. © 2014 Bricker & Eckler LLP J. Caleb Bell, Partner Bricker & Eckler LLP jbell@bricker.com 614.227.2384 Questions?

22. Property Assessed Clean Energy (PACE): A Tool to Sustain Central Ohio’s Growth

23. Mid-Ohio Regional Planning Commission (MORPC)

24. Population Growth - Projections Source: Insight 2050, Calthorpe Associates & MORPC

26. Connecting strong regional energy portfolio to the region’s economic productivity Assess region’s current state of energy Set of eight recommendations Regional Energy Action Plan

27. Columbus area residents use 8% more energy than the average American Columbus area residents use 3% more energy than the average Ohioan

28. Manufacturing (ME3) Program 14 companies  $800,000 cost savings from 42 projects Residential Energy Efficiency Programs 15,000 households served Energy Special Improvement Districts / PACE 6 member governments working together Programs and Services:

29. Christina O’Keeffe Director of Energy & Air Quality 111 Liberty Street, Suite 100 Columbus, Ohio 43215 cokeeffe@morpc.org www.morpc.org

30. Columbus-Franklin County Finance Authority Columbus Region Energy Fund Columbus-Franklin County Finance Authority Jean Carter Ryan President

31. Columbus-Franklin County Finance Authority Financing Features:  Transaction size $100,000 to $5,000,000  Up to 100% financing of project costs  Fixed rates up to 15 years  Energy usage reduction should range from 15%/20% (need energy audit)  Energy savings pay for the investment

32. Eligible Projects:  Office Buildings  Retail  Manufacturing  Healthcare  K-12, University  Government  Non-profits

33. Columbus-Franklin County Finance Authority Eligible Improvements:  Energy efficiency retrofits to existing buildings including:  Lighting  Energy management systems and controls  High efficiency HVAC

34. Columbus-Franklin County Finance Authority Eligible Improvements:  Water conservation or reduced flow  Energy projects and distribution technologies including:  Waste energy recovery, power generation, absorption chillers, process reviews  Fuel cells  Renewable power generation

35. Columbus-Franklin County Finance Authority Territory includes 11 Counties in Central Ohio:  Franklin, Union, Logan, Delaware, Marion, Monroe, Knox, Madison, Pickaway, Licking, Fairfield  Can go statewide

36. Columbus-Franklin County Finance Authority Trinity Project :  $655,000 loan  4.35%; 12-years  Payback 7.2 years  Annual savings - $78,000; Net $4,200

37. Columbus-Franklin County Finance Authority Trinity Project:  Non-Pace  1 st mortgage on building  Financed LED lighting and controls

38. Columbus-Franklin County Finance Authority State Loan Loss Reserve:  CFFA qualified for additional reserves  50% up to $500,000 per project  Cap at $2.5 million  Must meet state criteria

39. Columbus-Franklin County Finance Authority Energy Loan Process:  Submit application which includes 3 years of business financials, current year budget, project cost & description, and energy audit.  Arrange site visit & facility walk through with qualified architect, engineer or contractor.  Determine needed improvements, cost estimates & energy savings.

40. Columbus-Franklin County Finance Authority Energy Loan Process:  CFFA prepares term sheet  Client executes  CFFA Finance Committee & Board approval  Close on financing

41. Columbus-Franklin County Finance Authority Jean Carter Ryan President (614) 429-0177 (614) 551-9268 (cell) Jryan@columbusfinance.org http://www.columbusfinance.org