TEXAS PROPERTY ASSESSED CLEAN ENERGY (TX-PACE) FINANCING: 101

Transcription

1 TEXAS PROPERTY ASSESSED CLEAN ENERGY (TX-PACE) FINANCING: 101 NTAEE January 18, 2018

2 TX-PACE WILL L O W E R Utility Costs I N C R E A S E Net Operating Income Bottom Line: Increased Building Value

3 WHAT IS TX-PACE? TEXAS PROPERTY ASSESSED CLEAN ENERGY Financing A way of paying for capital projects with no money out of pocket. (100% long-term financing; project pays for itself)

4 WHAT IS TX-PACE? 100% long term, low cost financing Energy efficiency, water conservation, and distributed generation On commercial; industrial/manufacturing; multi-family (5+ units); non-profit; hospitality; and agricultural existing buildings Repaid via special land-use assessment

5 WHAT IS TX-PACE NOT? MYTH #1: TX-PACE is a Performance Contract and Requires Savings Guarantees MYTH #2: TX-PACE Involves Government Money OR Is Government Run MYTH #3: TX-PACE is available for Government, New Construction or Single Family Residential buildings

6 ELIGIBLE TECHNOLOGIES M U S T: o OR o A N D R e d u c e E n e r g y / W a t e r c o n s u m p t i o n o r d e m a n d O n s i t e g e n e r a t i o n b e h i n d c u s t o m e r m e t e r P E R M A N E N T LY A F F I X E D

7 POTENTIAL PROJECTS ENERGY EFFICIENCY HVAC systems and controls Combustion and burner upgrades Heat recovery equipment Lighting systems Mechanical system modernization Energy management systems and controls Building enclosure and envelope improvements and more!

8 POTENTIAL PROJECTS WATER CONSERVATION Wastewater recovery and reuse Water management systems and controls (indoor/ outdoor) Systems to capture, treat and use other on-site sources of water (condensate, rainwater, reverse osmosis reject water, etc.) and more!

9 POTENTIAL PROJECTS ONSITE GENERATION/RESILIENCY Solar Energy storage Fuel switching Combined Heat and Power (CHP) and more!

10 HOW TX-PACE WORKS

11 LONG SIMPLE PAYBACK? NO PROBLEM! TX-PACE helps lower utility costs and increase net operating income

12 TX-PACE VALUE PROPOSITION Long-Term Financing Option Remains with Property Pass-Through to Tenants Image credit:

13 What the CFO/Owner HEARS X X X X X Where will I get the funding? What if I sell the building in 5 years? We only do 3-Year payback projects Good technology but my tenant pays the energy bills Are these savings even real? I ve been burned before

14 Changing the Story What if you could develop a solution that Provides 100% up front funding of all hard and soft costs? Allows a 20+ Year repayment term = immediate income source Allows transfer of obligation automatically on sale Doesn t tie up borrowing capacity Requires savings to be validated by third party review

15 OTHER CONSIDERATIONS TRIPLE NET LEASE PASS-THROUGH TRANSFERS ON SALE TAX TREATMENT NO ACCELERATION ON DEFAULT NO PERSONAL GUARANTEE FUNDS AVAILABLE FOR CONSTRUCTION

16 TX-PACE Assessments CAN Include: The cost of materials and labor necessary for the installation of a qualified improvement. Permit fees; Inspection fees; Lender s fees; Program application and administrative fees; Project development and engineering fees; ITPR fees, including verification fees; Any other fees or costs that may be incurred by the property owner incidental to the installation, modification, or improvement: Legal, consulting and other fees on an actual cost basis; and Changes to the existing property that are incidental to the installation.

17 Financial Impact of TX-PACE - An Example Commercial Office Building Project involves a $1.1M energy efficiency retrofit Annual energy and maintenance savings of $125,000 (8.8 years simple payback) The project does not pass the property owner s hurdle rate for investment in energy efficiency TX-PACE funding available for 20 years at 6.0%. Conventional funding for 5 years at 4.0% (w/ 20% down payment)

18 Cash Flows

19 EXAMPLE CAPITAL STACK $115 Million commercial building conversion

20 Butler Brothers Building Dallas M e a s u r e s : H V A C L i g h t i n g I n s u l a t i o n R o o f i n g G l a z i n g P l u m b i n g I r r i g a t i o n E x t e r i o r W a t e r p r o o f i n g / P l a s t e r A s s e s s m e n t T o t a l : $ 2 4 M i l l i o n A n n u a l S a v i n g s : 40% energy reduction 700,000 gallons of water; 3,500 metric tons CO 2e

21 Congregation Beth Israel Austin M e a s u r e s : B o i l e r s C h i l l e r s W i n d o w F i l m B A S C o n t r o l s A s s e s s m e n t T o t a l : $ K A n n u a l S a v i n g s : $ 4 0, 0 0 0

22 Simon Property Group Travis and Williamson Counties R O U N D R O C K O U T L E T S R O U N D R O C K M e a s u r e s : H V A C L i g h t i n g W a t e r A s s e s s m e n t T o t a l : $ 3 M i l l i o n A n n u a l S a v i n g s :

23 RJ Liebe Company Navarro M e a s u r e s : H V A C L E D l i g h t i n g A s s e s s m e n t T o t a l : $ 3 2 5, A n n u a l U t i l i t y S a v i n g s : 3 0 %

24 1225 North Loop West Houston M e a s u r e s : H V A C L E D l i g h t i n g B A S C o n t r o l s A s s e s s m e n t T o t a l : $ 1. 3 M i l l i o n A n n u a l S a v i n g s : $ 1 8 5, 0 0 0

25 Where is TX-PACE? Counties: -Brazos County -Cameron County -El Paso County -Fort Bend County -Hays County -Hidalgo County -Jefferson County -Navarro County -Nueces County -Travis County -Willacy County -Williamson County -Tarrant County Cities: -City of Amarillo -Farmers Branch -City of Dallas -City of Houston + ETJ and more coming soon!

26 TX-PACE is a WIN-WIN-WIN Property Owners lower utility bills, energy independence, energy efficiency, property value increase Contractors source of increase in business, more local hiring, best practices, keeping up with technology advancements Lenders new loans, steady & stable process, fully collateralized, Tax Assessment lien position, improved asset value State of Texas reduced peak demand, improved grid loading, distributed generation as resilient power source, improved air quality, better water conservation Communities increased economic development and jobs, improved building infrastructure, more appealing building stock 26

27 TEXAS OPEN-MARKET PACE PROGRAM ADMINISTRATOR w w w. Te x a s PA C E A u t h o r i t y. o r g Bridget Branch Bridget@TexasPACEAuthority.org POWERED BY: