Presenters 8/2/2017. Success of a Public/Private Partnership for Energy Project Financing. August 30, 2017

Transcription

1 Success of a Public/Private Partnership for Energy Project Financing August 30, 2017 Leading Age New York Financial Professional s Annual Conference Presenters Luz Liebeskind, CFO, Hebrew Home at Riverdale by RiverSpring Health Jon Kole, VP Administration, Hebrew Home at Riverdale by RiverSpring Health Holly Andreozzi, Senior Vice President Energy Services, Banc of America Public Capital Group, Bank of America Merrill Lynch Michael Liberta, President, Talen Energy, Trystate Mechanical, Inc. 2 1

2 Agenda Overview and history of Hebrew Home at Riverdale by RiverSpring Health Hebrew Home campus Co-gen project goals, rationale & background Co-gen project team Trystate, Construction Manager - Organization and project overview and location of plant Financing Team NY Green Bank, Dormitory Authority, Banc of America Banc of America, Overview of financing options Co-gen project financing highlights and cash flow Lessons learned Other financing alternative Q&A throughout 3 History of the Hebrew Home by RiverSpring Health 4 2

3 This is now.. 5 Programs and Services of RiverSpring Health Nursing Home Short-term Rehabilitation Managed Long Term Care Assisted Living (ALP) Independent Living Affordable Housing Home Care Care Management Nation s first elder abuse shelter 6 3

4 RiverSpring Health Nursing Home Housing Insurance Community Services Hebrew Home Short-Term Rehabilitation Transform 2020 RiverWalk RiverSpring Assisted Living Hudson House 1880 Boston Road Managed Long Term Care (MLTC) Special Needs Plan (SNP) FIDA Certified Home Health Agency (CHHA) Licensed Home Care Services Agency (LHCSA) Geriatric Care Management 7 RiverSpring Residences (Assisted Living) River s Edge (CCRC) Co-gen Our campus 32 acres on the banks of the Hudson River in New York City 7 buildings Approximately 620,000 square feet Skilled nursing, sub-acute rehab, dementia care, assisted living (ALP), independent living and elder abuse shelter 8 4

5 Co-gen Project Goals 1. Achieve shelter-in-place/safe-haven status 2. Reduce carbon footprint and further Green goals 3. Reduce operating expenses 4. Replace obsolete major physical plant equipment 9 Co-gen Project Rationale Experience during Super Storm Sandy was eye-opening Obsolete physical plant equipment that needed replacement limited capital funds Provide more reliable power to vulnerable population 10 5

6 Project Background Engaged developer to study feasibility of Co-gen plant on campus NYSERDA evaluated potential partnership and funding opportunities Fully leveraged considered outside company to own and operate plant DOH supportive as it furthered mutual goal of resident safety Con Ed supportive as they are constantly working to remove load from the grid 11 Co-gen Project Team Trystate, Construction Manager AKF, Mechanical Electrical Plumbing Engineer HO Penn, Equipment Manufacturer Perkins Eastman, Architect PWRCIERGE, Developer Con Ed Owner Hebrew Home Team (Daniel Reingold, CEO, Luz Liebeskind, CFO, Jon Kole, VP Administration and Michael Bialek, VP Real Estate) CPC, Owner s Rep Jaffe Holden, Acoustic Consultant 12 6

7 Organization Overview Incorporated in 1976 Acquired by PPL Corporation in 2002 Geographic territory is New York State and surrounding Northeast region including CT, MA, NJ and CT 300 full-time staff & 1,000 tradespeople Group s annual revenues exceed $300 mil. >50% of annual revenue for healthcare clients Bonding capacity: $50 mil. single project & $300 mil. aggregate Insurance: Broad Form Industry Specific Manuscript Coverage underwritten by A rated carriers CONFIDENTIAL 14 7

8 Organization Overview Approach to projects is defined as Collaborative Solutions In-house staff provides development, engineering, construction, operation & maintenance services Entry into project development cycle varies based on client s need Delivery models Project development Construction management Design-build & design-assist Integrated Project Delivery Trade Management CONFIDENTIAL 15 Project Overview Electricity generated using two (2) Caterpillar engines Fuel to operate the engines is natural gas Heat generated by the engines, while they are generating electricity, will be recovered Recovered heat will be used to make steam Steam will be used for the campus and for a new 250-ton absorption chiller Chiller is installed in a modular box CONFIDENTIAL 16 8

9 Project Overview System is a completely packaged solution for installation on the roof The modular approach improves the speed of system installation via plug and play methods Product and system quality are improved via shop manufacturing methods in lieu of field construction methods Risk is mitigated via drastically reduced resource utilization at the job site CONFIDENTIAL 17 View of the plant from the loading dock area 18 9

10 View of the plant from the main entrance 19 Co-gen Financing Team Banc of America (BofA) NY Green Bank (NYGB) Art Ware, Dormitory Authority of State of New York (DASNY), Tax-Exempt Leasing Program (TELP) 20 10

11 NY Green Bank NY Green Bank is a state-sponsored, specialized financial entity working with the private sector to increase investments into New York s clean energy markets, creating a more efficient, reliable and sustainable energy system. NY Green Bank increases the availability of capital for projects deploying proven clean energy technologies across New York State through: Leveraging private sector capital to support and expand clean energy financing markets; Animating and growing capital markets reducing the need for government support; and Motivating faster and more extensive deployment of clean energy assets, contributing to economic development, greater energy choices, reduced environmental impacts and more green energy advantages for every public dollar spent. NY Green Bank is a division of NYSERDA. Website: 21 Dormitory Authority State of New York (DASNY) Tax- Exempt Leasing Program (TELP) DASNY s Tax-Exempt Equipment Leasing Program (TELP) helps its customers to finance equipment. Health care facilities, higher education institutions and certain other eligible not-for-profit institutions receive the benefit of tax-exempt financing by using TELP. The TELP program provides: Low interest rates Simplified documentation Financing for multiple equipment purchases A vehicle to finance industry leading technologies to keep systems up-to-date Website: To learn more, contact Art Ware, Senior Financial Analyst at (518)

12 Overview of Financing Options Holly Andreozzi Banc of America Public Capital Corp Energy Services ARCJYBPT 2.17 Notice to Recipient Bank of America Merrill Lynch is the marketing name for the global banking and global markets businesses of Bank of America Corporation. Lending, derivatives, leasing, equipment finance, and other commercial banking activities are performed globally by banking affiliates of Bank of America Corporation, including Bank of America, N.A., Member FDIC. Securities, strategic advisory, and other investment banking activities are performed globally by investment banking affiliates of Bank of America Corporation ( Investment Banking Affiliates ), including, in the United States, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Merrill Lynch Professional Clearing Corp., both of which are registered broker dealers and Members of SIPC, and, in other jurisdictions, by locally registered entities. Merrill Lynch, Pierce, Fenner & Smith Incorporated and Merrill Lynch Professional Clearing Corp. are registered as futures commission merchants with the CFTC and are members of the NFA. Investment products offered by Investment Banking Affiliates: Are Not FDIC Insured * May Lose Value * Are Not Bank Guaranteed. These materials have been prepared by one or more subsidiaries of Bank of America Corporation for the client or potential client to whom such materials are directly addressed and delivered (the Company ) in connection with an actual or potential mandate or engagement and may not be used or relied upon for any purpose other than as specifically contemplated by a written agreement with us. These materials are based on information provided by or on behalf of the Company and/or other potential transaction participants, from public sources or otherwise reviewed by us. We assume no responsibility for independent investigation or verification of such information (including, without limitation, data from third party suppliers) and have relied on such information being complete and accurate in all material respects. To the extent such information includes estimates and forecasts of future financial performance prepared by or reviewed with the managements of the Company and/or other potential transaction participants or obtained from public sources, we have assumed that such estimates and forecasts have been reasonably prepared on bases reflecting the best currently available estimates and judgments of such managements (or, with respect to estimates and forecasts obtained from public sources, represent reasonable estimates). No representation or warranty, express or implied, is made as to the accuracy or completeness of such information and nothing contained herein is, or shall be relied upon as, a representation, whether as to the past, the present or the future. These materials were designed for use by specific persons familiar with the business and affairs of the Company and are being furnished and should be considered only in connection with other information, oral or written, being provided by us in connection herewith. These materials are not intended to provide the sole basis for evaluating, and should not be considered a recommendation with respect to, any transaction or other matter. These materials do not constitute an offer or solicitation to sell or purchase any securities and are not a commitment by Bank of America Corporation or any of its affiliates to provide or arrange any financing for any transaction or to purchase any security in connection therewith. 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Bank of America Corporation and its affiliates (collectively, BofA Corp. ) comprise a full service securities firm and commercial bank engaged in securities, commodities and derivatives trading, foreign exchange and other brokerage activities, and principal investing as well as providing investment, corporate and private banking, asset and investment management, financing and strategic advisory services and other commercial services and products to a wide range of corporations, governments and individuals, domestically and offshore, from which conflicting interests or duties, or a perception thereof, may arise. In the ordinary course of these activities, parts of the BofA Corp. at any time may invest on a principal basis or manage funds that invest, make or hold long or short positions, finance positions or trade or otherwise effect transactions, for their own accounts or the accounts of customers, in debt, equity or other securities or financial instruments (including derivatives, bank loans or other obligations) of the Company, potential counterparties or any other company that may be involved in a transaction. Products and services that may be referenced in the accompanying materials may be provided through one or more affiliates of BofA Corp. We have adopted policies and guidelines designed to preserve the independence of our research analysts. These policies prohibit employees from offering research coverage, a favorable research rating or a specific price target or offering to change a research rating or price target as consideration for or an inducement to obtain business or other compensation. We are required to obtain, verify and record certain information that identifies the Company, which information includes the name and address of the Company and other information that will allow us to identify the Company in accordance, as applicable, with the USA Patriot Act (Title III of Pub. L (signed into law October 26, 2001))and such other laws, rules and regulations as applicable within and outside the United States. We do not provide legal, compliance, tax or accounting advice. If any person uses or refers to any such tax statement in promoting, marketing or recommending a partnership or other entity, investment plan or arrangement to any taxpayer, then the statement expressed herein is being delivered to support the promotion or marketing of the transaction or matter addressed and the recipient should seek advice based on its particular circumstances from an independent tax advisor. Notwithstanding anything that may appear herein or in other materials to the contrary, the Company shall be permitted to disclose the tax treatment and tax structure of a transaction (including any materials, opinions or analyses relating to such tax treatment or tax structure, but without disclosure of identifying information or, except to the extent relating to such tax structure or tax treatment, any nonpublic commercial or financial information) on and after the earliest to occur of the date of (i) public announcement of discussions relating to such transaction, (ii) public announcement of such transaction or (iii) execution of a definitive agreement (with or without conditions) to enter into such transaction; provided, however, that if such transaction is not consummated for any reason, the provisions of this sentence shall cease to apply. BAPCC is not a municipal advisor and is not subject to the fiduciary duty established in Section 15B(c)(1) of the Securities Exchange Act of 1934, as amended, with respect to any municipal financial product or issuance of municipal securities. The information provided in this document is not intended to be and should not be construed as advice with the meaning Section 15B of the Securities Exchange Act of 1934 and the municipal advisor rules of the SEC. Copyright 2017 Bank of America Corporation

13 Banc of America Leasing Overview Bank of America Lines of Business Bank of America Consumer Banking Preferred and Small Business Banking Global Banking & Markets Global Wealth & Investment Management Global Technology and Operations Legacy Assets and Servicing Global Banking & Markets Global Corporate & Investment Banking Global Commercial Banking Business Banking Global Markets Global Research Global Corporate & Investment Banking Global Investment Banking Global Corporate Banking Global Capital Markets Banc of America Leasing Global Transaction Services (GTS) Banc of America Leasing Corporate Leasing Americas EMEA APAC Commercial Equipment Finance Middle Market Business Banking Equipment Finance Global Corporate Aircraft Finance (GCAF) Global Vendor Finance (GVF) Renewable Energy Finance BAPCC 1 Energy Services Healthcare & Institutions Government 26 1 Certain products are offered through Banc of America Public Capital Corp, a wholly-owned subsidiary of Bank of America N.A. Tax Credit Distributions Capital Markets Syndications Indirect Originations Investment Management Global Portfolio Trading & Acquisitions Banc of America Leasing Ireland Commercial Aircraft Group 13

14 Banc of America Leasing Overview Banc of America Leasing is the industry leader among equipment finance companies providing customized global asset and equipment financing solutions. 27 #1 U.S. leasing company 1 Over 900 associates worldwide with major U.S. offices in Atlanta, Baltimore, Boston, Charlotte, Chicago, Dallas, Detroit, New York, Providence and San Francisco; Global offices in Dublin, Essen, Frankfurt, Hong Kong, Kuala Lumpur, London, São Paulo, Singapore and Toronto $57.2 billion in total assets and $18.5 billion in new business volume 2 Originate and Distribute model Approaches the equipment finance market through bank client originations channels and vertical product expertise - includes Capital Markets and asset management capabilities Roles and Product Expertise Professional staff of originators, syndicators, attorneys, accountants, appraisers, industry-specific credit underwriters, contract administrators and equipment managers Broad range of advisory, arranging, underwriting and syndication services Portfolio management services Intellectual capital regarding tax, accounting and legislative issues 1 Special Issue 2017 Monitor 100 (July); 2 As of December 31, Certain products are offered through Banc of America Public Capital Corp, a wholly-owned subsidiary of Bank of America N.A. Originations Corporate AMRS, EMEA, APAC Commercial Equipment Finance Middle Market Business Banking Equipment Finance Global Corporate Aircraft Finance Global Vendor Finance General Industries Technology Renewable Energy Finance Banc of America Public Capital Corp (BAPCC) 3 Energy Services Healthcare & Institutions Finance Government Finance Tax Credit Distributions Banc of America Leasing Ireland Asset Management Investment Management Equipment Management Commercial Aircraft Capital Markets Syndications Global Portfolio Trading and Acquisitions Portfolio and Secondary Market Purchases Sales & Restructuring (Portfolio Optimization) Indirect Originations About Banc of America Public Capital Corp 28 Business Model Banc of America Public Capital Corp (BAPCC), a wholly-owned subsidiary of Bank of America N.A., serves the needs of clients in the energy, healthcare, institutions and government markets, providing integrated resources and business capabilities under one organization. BAPCC, which includes Energy Services, Healthcare & Institutions Finance and Government Finance, provides both taxable and tax-exempt financing solutions to states, municipalities and other tax-exempt institutions, as well as commercial and industrial companies. The team works closely with clients to develop solutions ranging from standard financings to highly structured transactions, each tailored to a client's unique needs and objectives. Energy Services Client Focus: State and local governments Federal government agencies Public education Public housing authorities Healthcare & Institutions Finance Client Focus Healthcare: Not for profit hospitals and systems For profit providers Hospital systems Multi specialty physician groups Hospital JV s Government Finance Client Focus: Institutions Healthcare ESCOs (Energy Services Companies) Waste water treatment facilities Public utilities Cooperative utilities For profit, non-provider healthcare entities including medical device manufacturers, biotech and pharmaceutical Client Focus Institutions: Higher education Cultural U.S. governmental agencies and sub-agencies including states, cities, counties, K-12 school districts, special districts (ports, transportation, water, sewer, power and health) Public colleges and universities Commercial and industrial Commercial real estate Hospitality Market Coverage: Nationwide Deal Size: $2MM-$100MM Religious Community organizations YMCA Salvation Army Goodwill Industries Market Coverage: Nationwide Deal Size: $1MM-$100MM Market Coverage: Nationwide Deal Size: $2MM-$100MM 14

15 Co-gen Project Highlights -Financing Estimated project cost: $14 million Financing: Tax-exempt lease through Dormitory Authority Funding: NY Green Bank (NYGB) ($11.4M -10 yrs.) & Bank of America ($2.6M -4 yrs.) & LOC for Contingency Interest rates: 3.359% (BofA) and 4.446% (NYGB) interest deferred until plant becomes operational Average annual savings 1st10 yrs.: $1.7 million Est. avg. annual debt service: $1.5 million per year on average NYSERDA grant: $2.4 million (tied to the performance of project) 29 Estimated Project Cash Flow 10 Year 4 year Projected Debt NYSERDA Debt Excess Year Savings Service Incentives Service Cash Flow , , , ,414, ,128, , , , ,510, ,223, , , , ,566, ,280, , , , ,626, ,485, , ,687, ,547, , ,750, ,610, , ,816, ,676, , ,885, ,745, , ,956, ,816, , ,030, ,890, , $17,246, $15,406, $2,400, $2,762, $1,477,

16 Key Milestones 8/7/17 - Guaranteed maximum price (GMP) finalized 11/30/17 - Co-gen engine delivery 12/31/17 - Jacob Reingold roof work complete 6/1/18 - Co-gen commissioning 31 Lessons Learned Finding the right partner is important Don t assume you cannot afford to do it on your own Finding a reputable/experienced contractor Flexible and creative financial partner Guaranteed savings options available NYSERDA grants and Con Ed rebates Time consuming but worth it 32 16

17 Other Financing Alternative 33 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 Commercial.EnergizeNY.org P 34 17

18 Commercial.EnergizeNY.org P 35 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 5.75%)* depending upon market conditions and even lower rates for not-for-profits located in Westchester County. *Rates as of Commercial.EnergizeNY.org P 36 18

19 Eligible Improvements Renewables: Solar PV, Solar Thermal, Geothermal, Wind Efficiency: Lighting, Boiler Conversions, Furnace Upgrades, Insulation, HVAC, Chillers, Windows, Pumps, Smart Controls 37 Commercial.EnergizeNY.org P 37 Finance Criteria Estimated annual energy savings from improvements must be greater than annual finance payments Improvements have savings-to-investment ratio > 1 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 Commercial.EnergizeNY.org P 38 19

20 Contact Information Luz Liebeskind, , Jon Kole, , Holly Andreozzi, , Michael Liberta, , 39 THANK YOU 20