Renewable Energy Revolving Loan Fund Program Implementation RFP Questions and Answers April 21, 2015

Transcription

1 1 South Pinckney, Suite 340 Madison, WI phone: fax: Renewable Energy Revolving Loan Fund Program Implementation RFP Questions and Answers April 21, 2015 PROPOSALS 1. Page 22 of the RFP top of page under 4.1 submission guidelines, under Electronic, there is a reference to uploading a copy of the completed and applicable Cost-Effectiveness Calculator (Excel file). Does the applicant need to prepare a forecast of renewable energy generated from this revolving loan fund in order to complete a cost effectiveness calculation? No. That was legacy text that should have been removed from the RFP. Neither a cost-effectiveness calculator nor energy generation projections are required for the proposal. 2. Page 11, Item #2, Seventh Sentence. You indicate that a maximum administrative budget of $350,000 annually is available. With a July 1 start date we are halving that maximum for the first year of the project in our budgets correct? We expect that ramp-up costs in Year 1 will be heavier than standard implementation, given outreach to various stakeholders, partners, and lenders and system establishment. There is $350,000 available annually for implementation of the Revolving Loan Fund, including We expect that bidders will submit budgets that compensate them fairly and competitively for the scope of work outlined in the RFP. Once we have chosen a program implementer, there will be a full review of proposed costs and negotiation will take place then. 3. Page 10 Section $2,500,000 available for the RLF each year. If demand for RLF is more or less in a given year, would CBI be flexible to allocate more or less funds in a given year based on this demand? This is a pilot program, and we are not certain of what demand for the loans will look like. If demand for RLF is less than $2.5MM in a given year, then the uncommitted funds will be rolled over into the following year's lending pool. 4. Would the same flexibility be possible for administrative costs per year based on work load in a given year as long as the total administrative costs over a four-year period doesn't exceed the total administrative costs ($1,400,000). The total implementation funding through 2018 is $1,400,000 and the Program Administrator is open to proposals that include some component of compensation based on the volume of transactions. We expect

2 that there will be some ramp-up, one-time-only costs during Year 1 to establish the program. Bidders should propose implementation costs that will fairly and competitively compensate them for the work required. Once we have chosen a program implementer, there will be a full review of proposed costs and negotiation will take place then. 5. Page 18 Section 2.8. The amount of funding available for PI for the RLF will not exceed $350,000. Is this per year? Would total administrative funding through 2018 will be $1,400,000 or $1,225,000 as the Program is not starting until July 1, The total implementation funding through 2018 is $1,400,000. That said, this is a competitive RFP and proposed cost for each bidder will factor in to the final hiring decision. PROGRAM IMPLEMENTATION 6. Page 12, Section 2.2, Third Paragraph, First Bullet. Maintaining RLF funds in a segregated account. Our understanding is that funds approved for a loan would pass directly to the Partner Lender and would be packaged with their funds to be distributed to the applicant. Please confirm that the funds maintained in this account are repayment funds transferred to the Program Administrator via ACH during the repayment process. Pending PSC approval and a signed contract with a Program Implementer, the annual revolving loan amount ($2.5MM) will be transferred to the Program Implementer at the beginning of each year. Those funds will be kept in a segregated account and managed by the Program Implementer. The Program Implementer will transfer the committed funds to Partner Lenders prior to each loan closing. The funds will not be transferred back to the Program Administrator (or SEERA, for that matter) until the program is terminated. 7. Second question to this section: At what frequency would these repayment funds be transferred back to Focus on Energy? It depends on the structure of the loan, but generally we would expect that repayment by the borrower to the Partner Lender would happen on a monthly basis and transfers to the Program Implementer for the Focus portion of the loan would happen with each repayment. The repayment funds would remain with the Program Implementer to be loaned out again until the termination of the program, at which point they will be transferred back to SEERA. 8. The RLF will provide a low or zero interest loan of up to $500,000 for qualified renewable energy projects, financing up to 50% of a project's financed cost. Would this be before or after Focus on Energy incentives? Financing will occur before Focus incentives are received. Loans will be made for up to 50% of the financed cost, without regard for what Focus incentives, or other incentives, will be received once construction/installation is complete. Page 2

3 9. Page 12 Section PI-Collaborating with other PIs to develop any additional marketing materials for the Focus loan. What is the incentive for existing Program Implementers to promote this Program if they are not going to claim savings from this RLF or paid for their time? Focus on Energy is a comprehensive portfolio of programs and there is an expectation that all program implementers will assist in guiding utility customers toward any and all program opportunities within the portfolio, for the sake of maximizing benefits for participants. Furthermore, savings from projects receiving loans will be counted towards either RECIP or Renewable Rewards. The Renewable Energy Loans will not have its own energy savings tally. Thus, the Implementers for those programs will have incentive to collaborate on marketing materials. 10. Focus Annual Compliance Audit: Would this create any problem for banks as they will be equal partner in loan? No. The compliance audit would only touch Focus incentives and liabilities. Focus is only responsible for its portion of the loan, not the portion of the loan financed by the bank. 11. How would CB&I address the issue of free riders with these loans? Focus on Energy will deal with attribution in the following way: 1. All technical reviews must be completed prior to start of construction 2. The participating bank provides a letter indicating that the loan would not occur without our participation and that the loan terms are below its market rate, prior to Focus funding 3. Focus will then offer a commitment letter for the project 4. Construction occurs/completed; system is tested to be sure it is operating (if large, otherwise simply provide proof of construction) 5. Focus purchases the participation 12. The initial contract with PI will be for 4 years. However, most of these loans (particularly residential) will be signed for longer than 4 years. If the program is terminated, what liabilities would PI or banks or both have? Assuming PI will not be responsible for any loan losses. The contract that the RLF Program Implementer will sign with the Program Administrator will clearly state that if the program is terminated, then loan servicing will be transferred to another payment processing company, so that loan tracking can be continued for the outstanding loans. The PI would not be responsible for any loan losses. 13. Will the Program Administrator contract with the Program Implementer require anti-crime / theft insurance coverage? If so, will this be an invoiceable expense, since the exposure increases to $10 million in year 4. Standard coverage amounts for implementation contracts under Focus on Energy are as follows: 1. Worker s Compensation and employer s liability ($1MM/accident, or $1MM/employee and policy for bodily injury by disease) Page 3

4 2. Commercial general liability ($1MM/occurrence; $2MM annual aggregate) 3. Automobile liability insurance ($1MM/accident) 4. Professional liability insurance ($2MM/occurrence) 5. Crime and fidelity insurance ($1MM/occurrence) Insurance is a cost of doing business and coverage is not an expense that may be directly invoiced to the Program. 14. Page 10, Section For this program, does the Program Administrator directly transfer all customer and Trade Ally questions to the Program Implementer with an established dedicated program line? Program Administrator Customer Service Center staff will be trained on high level questions about the program, so they can assist the caller/customer as much as possible. More detailed and program-specific technical questions would be transferred to a PI customer service line. 15. Can you confirm the Program Administrator will field all questions related to the technical review of RECIP applications? Yes, the Program Administrator will field all questions related to the technical review of RECIP loan and incentive applications. 16. What is the outline of contents for the Technical Review document performed by the Program Administrator? Does the Technical Review include law/regulation compliance and regulatory permit requirements? Who is responsible for permit compliance? RECIP technical reviews rely on point value assignment to projects based on expected savings, proposed system design, budget and timeline. Permitting and law/regulation compliance are usually not a part of the point allocations. We expect that all applicants and awardees adhere to local laws and regulations as we do with all those who sign our incentive agreements. 17. Must projects be entirely installed and completed prior to the calendar year-end dates or program yearend dates? Or can an in-process application and installation overlap program years? Since uncommitted revolving funds will be rolled over to the following year, an in-process application and installation may overlap years. 18. Clarifying question: We understood you to say that the Program Administrator has the responsibility to develop the marketing pieces used in promotion. And we are assuming that develop also means all production costs for quantities forwarded to the PI for circulation to Partner Lenders in seeding the program. And that is why the allowable expenditure categories EXCLUDE marketing as an expense, just like travel is excluded---neither expense use is necessary. Marketing was not mentioned during the bidder conference call, as none of the submitted questions pertained to marketing materials or their development. The Program Administrator will produce the Page 4

5 following documents, which may be used during outreach and education of partner lenders, trade allies, and customers, and will also be publicly available on the Focus on Energy website: Participation Agreement Guide to the Participation Agreement Lender FAQ Borrower FAQ Loan Program Guidelines RECIP Loan Application/RFP Renewable Rewards Loan/Incentive Reservation Application In addition to these materials, the Program Administrator will update the Focus on Energy website to include information about and references to the Renewable Energy loans wherever appropriate. If a Program Implementer believes that marketing materials will be necessary to supplement the materials being developed by the Program Administrator and to effectively conduct outreach to trade allies, customers, and partner lenders (as detailed in the scope of work), then please include a summary of marketing activities in the proposed approach. Also, explain what materials will be developed and what costs will be incurred. Include those costs as a marketing line item in the Proposed Budget by Category Table that is included in your proposal. The same guidance applies to travel: If a Program Implementer believes that travel will be necessary to effectively conduct outreach to trade allies, customers, and partner lenders (as detailed in the scope of work), then please explain what travel will be needed and what costs will be incurred. Include those costs as a travel line item in the Proposed Budget by Category Table that is included in your proposal. We ask that travel expenses align with the U.S. General Services Administration guidelines for travel, as outlined in the Focus on Energy Policies and Procedures Manual. LOAN STRUCTURE 19. Page 15, last paragraph references a requirement that if there is a construction loan the Focus on Energy Portion of the loan will not be funded until construction is complete. Is it anticipated that there will be a general requirement that the Focus on Energy portion of the loan will only be funded following completion of construction or is this only the case if there is a construction loan? We expect that financing will occur after construction, but in cases where it does prior to completion, there will be no expectation that the implementer will monitor construction or conduct site visits. 20. Page 15, Last Paragraph. Is the Partner Lender obligated to provide construction lending or can the applicant secure that elsewhere? Page 5

6 We expect that the Partner Lender will provide the construction financing. If the partner lender is providing take-out financing post construction, financing will have to be arranged prior to commissioning of the system. The system cannot be up and running at time of the take-out financing. 21. Second question to this section: Does it matter where construction financing is sourced to FoE? As long as the program can meet attribution requirements, the construction financing can be provided by another entity. However, the Focus of Energy Renewable Loan Program will only participate with regulated financial institutions, such as banks, thrifts, credit unions and certified Community Development Financial Institutions. 22. Page 18, Section 2.8, Second Paragraph, Second Sentence. Does Focus on Energy have a rate in mind (or cap) for administrative fees on loans administered by the Program Administrator? There is no specific cap, but the loan program must be seen as offering a deep discount to the prevailing rates offered in the marketplace. 23. The RLF is intended to provide low-cost upfront cash to pay for a renewable energy project. Would then RLF be set up as a line of credit by the bank versus reimbursement based on invoices paid by the customer? No, the loan proceeds will be issued in full once construction is complete. 24. Would RLF allow banks to collect fees based on the total costs of the projects, including Focus on Energy incentives or just the total loan amount including RLF? Banks may collect fees on the total loan amount, including the RLF loan. The intention here is allow banks to cover their costs for loan servicing, since they will also be servicing the Focus portion of the loan. 25. Page 10 Section 2.1. Does the RFP "subordination" language extend beyond the stream of repayment revenue to include collateral position too? Since the program will be purchasing a participation in the note, the program will have the same collateral as the partner lender. 26. Does the RFP allow unsecured loans if that is the partner bank proposed structure? Yes, the program will purchase a participation under the terms provided by the eligible partner lender. 27. What is the Focus on Energy envisioned treatment of loan filing fees and loan collection and legal expenses incurred? Or customer late payment fee revenue? Page 6

7 The program will not cover any costs of loan origination or closing by the partner bank. The program will be entitled to a pro rata share of any fund paid by the customer, after the partner lender has recovered its costs, as defined by the lender agreement terms and conditions. 28. How much time is allowed until the loan closing event or complete installation? Focus will only purchase participations in loans occurring at the time of commissioning or system activation. 29. Page 10, Item 2.1, Fourth Paragraph, Fifth Sentence. Has the bank fee that the Partner Lenders been established? If so, what is this amount? No, there is no cap on fees but the partner banks must certify that the loan is below its standard rate. 30. Clarifying question: You said that a multiple disbursement non revolving line of credit structure is not allowable. These are common loan structures used with projects having major construction or installation financing. Banks are reluctant to forward all monies to the company the first day. Maybe you meant to say revolving lines of credit structures are not allowed? In Question 23, the response was that the loan proceeds will be issued in full once construction is complete and that is accurate. The lender may portion out disbursements to the borrower or provide funding in a revolving line of credit structure, but Focus on Energy is purchasing a participation in a defined loan and its portion of any loan will be disbursed in full once construction is complete. PARTICIPATION AGREEMENT 31. If during the term of the loan, repayment defaults, can the bank partner make claim on previous loan payments already remitted to the Program Administrator and Focus on Energy? The partner lender will be bound by the terms and conditions of the underlying participation agreement, which will prohibit these types of claims. 32. Is a sample Focus on Energy participation agreement language available? Not yet. We are working on drafting the master participation agreement and the participation certificate with Focus on Energy attorneys. 33. May the Focus on Energy participation agreement language be modified at the request of a partner bank? We envision signing one master participation agreement with Partner Lenders, with overarching guidance about the relationship between Focus on Energy and the Partner Lenders. Along with each transaction, we will sign a Participation Certificate, which can be modified at the request of a Partner Page 7

8 Lender. Negotiation of the Partner Certificate language will be the responsibility of the Program Implementer. 34. Does the language absolve or indemnify Focus on Energy, the Program Administrator, and the Program Implementer from any legal or financial actions by a civil authority, trade ally, or customer? Yes. PARTNER LENDERS 35. Page 10 Section 2.1 The RFP language states "It is expected that the majority of banks that participate as Partner Lenders will be local Wisconsin banks, not national chains." Is "majority" a requirement? Define a "national chain"? What if locally chartered state bank has been acquired by a "national chain"? Is Johnson Bank considered a national chain bank because it has locations outside of Wisconsin? What about BMO Harris with an international headquarters? Focus on Energy does not have any requirements about the types of Partner Lenders that will participate, as long as they are qualified lenders. It is expected, based upon experience in other programs nationally, that local lenders will participate more readily than other types. 36. The customer must find the partner bank within 30 days of the technical review. Is this extendable? Yes, this period of time could be extended on a case-by-case basis. The reason for the time limit is so that Focus on Energy can have a strong handle on the amount of loan funds that have been reserved, and the amount that is still available to loan. RENEWABLE ENERGY LOAN APPLICATIONS 37. What entity is responsible for designing the Focus on Energy RE RLF Customer Application that is to be integrated into the existing RECIP and Renewable Rewards applications? The Program Administrator will work with the RR Program Implementer to integrate the loan components into the Renewable Rewards application. The Program Administrator will integrate the loan components into the RECIP RFP. 38. Page 15. Second Paragraph. Is there a sample loan application available from Focus on Energy or is it the responsibility of the Program Administrator to design this application? The Program Administrator is integrating the loan application into the RECIP and Renewable Rewards applications. The issue with the loan application is that Focus on Energy is not a financial institution. The information requested by Focus in this application will apply strictly to the technical aspects of the Page 8

9 project, not the creditworthiness of the applicant. Focus will give technical approval based on the soundness of the energy savings projections. The applicant will concurrently or subsequently go through a credit approval process with a qualified lender. Focus will depend on the lender's due diligence and underwriting process to establish loan terms. 39. Second question to this section: Can the application be modeled after industry standards such as the SBA 7(a) or 504 applications? The loan application for Focus will not look like a standard loan application. Focus is not a lender. Focus will approve the project from a technical perspective and the Partner Lender will approve the applicant from a creditworthiness/ability to pay perspective. PROJECT ELIGIBILITY 40. Page 11, second sentence. The residential solar photovoltaic awards are capped at 20 kw. Later on we discuss commercial applications but there does not appear to be a cap. Is it correct to assume that one does not exist? There is no cap for project size for the RECIP loans, but the most that Focus would loan for any given project would be $500,000, which would be no more than 50% of the total financed cost of the project. 41. Page 11, Item #2, Second Sentence. Your qualifications state that the funding is for a new renewable energy project. If a company has (for example) a set of solar PV panels on the roof but wants to add to the array using the RECIP Loan, would it be correct to define the additional panels as a new project or would these be listed as an expansion of an existing project and possibly not qualifying for the loan? According to RECIP guidance, we can fund a new system or an expansion of an existing system that results in a significant increase in the output/savings of the original system. The determination of "significant" is how much energy is being saved/offset above and beyond the savings of the existing system, the technical evaluation team would have to determine if the additional savings is significant enough to constitute funding. Page 9