PACE Property Assessed Clean Energy for Missouri.

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PACE Property Assessed Clean Energy for Missouri

Transcript of PACE Property Assessed Clean Energy for Missouri.

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PACEProperty Assessed Clean Energy

for Missouri

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Formula For Getting the Full StoryA.K.A. Table of Contents: Who - Invented PACE

What - Is PACE Where - Is PACE Found When - Did PACE Happen Why - Is PACE Important How - Is PACE Implemented

“Public goods are those which are in everybody’s interest to have,

but in no one’s interest to provide.”

-The Economist

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Property Assessed Clean EnergyWho? What? Where? When? Why? How? PACE methodology allows for a political subdivision

(Clean Energy Development Board) to finance the cost of installing energy efficiency or renewable energy improvements on private property.

No upfront payment by property owner

Participants repay the costs of the installations through a assessment on their property tax bill.

A lien attaches to the property secures the repayment obligation. Lien passes with title.

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Property Assessed Clean EnergyWho? What? Where? When? Why? How?Removes historical barriers to energy efficiency and renewable

energy installations:

Eliminates initial capital requirements; replaced with yearly payments that correspond to the lifespan of the installation.

Will be accessible to residents and businesses of all income levels.

Will incorporate both energy efficiency and renewable upgrades to properties.

Will be sustainable, scalable, and flexible; it will be self sufficient with little to no public financial support

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Brief History of PACE Implementation Who? What? Where? When? Why? How?

Berkley CA Department of Energy – Pilot ARRA: Jobs Bill – Public Purpose White House

Policy framework (http://www.whitehouse.gov/assets/documents/PACE_Principles.pdf

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Implementation of PACE Who? What? Where? When? Why? How?

“We are going to make it a lot easier to borrow money. We are doing this by encouraging communities to give you the option to pay the expense of retrofitting your home by paying it back on your property taxes”.

--Vice President Biden

The White House has determined PACE to be a priority mechanism for retrofitting buildings:

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Brief History of PACE in Missouri Who? What? Where? When? Why? How?

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Missouri Organizations Supporting PACE Who? What? Where? When? Why? How?

City of Kansas City St. Louis County City of Ferguson City of Creve Coeur Kansas City P&l Missouri Municipal

League Missouri Bankers

Association

Missouri Association of Accredited Energy Professionals

Missourians for a Balanced Energy Future

Renew Missouri Missouri Votes

Conservation Missouri Energy Initiative

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Missouri Ranked 41st in Energy Efficiency Who? What? Where? When? Why? How?

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Property Assessment Clean Energy ActHouse Bill 1692 is Signed by Gov. Nixon

In Missouri, PACE was supported by a broad coalition of groups and passed the Missouri General Assembly as part of a bi-partisan effort by a vote of 144-11 in the House as part of House Bill 1692.

RSMO § 67.2800 – 67.2835

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Eligible Measures Who? What? Where? When? Why? How?

Insulation in walls, roofs, attics, floors, foundations, and heating and cooling distribution systems;

Storm windows and doors, multiglazed windows and doors, heat-absorbing or heat-reflective windows and doors, and other window and door improvements designed to reduce energy consumption;

Automatic energy control systems;

Heating, ventilating, or air conditioning distribution system modifications and replacements;

Caulking and weatherstripping;

Replacement or modification of lighting fixtures to increase energy efficiency of the lighting system without increasing the overall illumination of the building unless the increase in illumination is necessary to conform to applicable state or local building codes;

Energy recovery systems; and

Daylighting systems

"Energy efficiency improvement", any acquisition, installation, or modification on or of publicly or privately owned property designed to reduce the energy consumption of such property, including but not limited to:

      

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Missouri Model Who? What? Where? When? Why? How? “on July 12th, 2010 Missouri became the 23rd state to pass PACE-enabling

legislation.  Why is this good news, you ask?  Well, for three reasons (at least):

Missouri voters have correctly predicted the outcome of every presidential election (save for two, 1956 and 2008) since 1904. Perhaps Missouri will once again be a bellwether, this time for PACE at a national scale?

Missouri’s a long way from Berkeley. The passage of PACE in Missouri is an indicator that PACE is a concept that transcends political, geographical, and social lines.  We’ve seen this highlighted in other states as well, but this recent news reinforces the trend.

Missouri’s bankers backed PACE. A source close to the effort told me that participation from the local banker’s association was critical to getting the bill pushed into law, going as far as saying that their participation was “the only way [the bill] got passed.”

Source: Huffington Post

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Program Steps and Process Cycle Who? What? Where? When? Why? How?

Clean Energy DevelopmentBoard is organized aspolitical subdivision

Property ownersvoluntarily enter

assessment contract tofinance and install energy

improvements

Bond Proceeds providefunds to pay for energy

projects

Property owner repays thebond through tax bill for a

period up to 20 years

PACECycle

Property Owner

Education /Information

PACE AccessAdministration

MeasureSuccess

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Program Process Who? What? Where? When? Why? How?

Application: Participant must release access to utility bill

Home Energy Audit: From approved contractor. Results determine which measures to install. Cost of audit incorporated into loan.

Cost Estimates: Participants obtain written "not to exceed" estimates from pre-approved contractors.

Review of Proposal: Review of audit and bid information to ensure the proposed measures have a positive savings to investment ratio.

Obtain Funding: Board obtains funding through financing mechanism

Notice to Proceed: Issued to contractors.

Completion of Projects: Inspection by PACE Program Administrator.

Contractor Payment: Board or its designee will directly pay contractor.

Repayment: Financing repaid via assessments on participant’s tax bill

Measurement and Verification: Review of energy consumption. Determine program performance and which measures have greatest impact.

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Flow of Funding Process Who? What? Where? When? Why? How?

PACE Board

Bond

Trustee

Assessor /Collector

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Typical Missouri Community? Who? What? Where? When? Why? How?

Owner-Occupied Housing Units . . . . . . 4,924 Sample PACE Transaction:

Minimum Bond Size Required $5 -10 Million

Average Property Improvement $10,000

Assessment Contracts Required 500

Source: U.S. Census 2000

Creve Coeur: PACE Penetration

Round 1: 10 (10%)

Stranded: 80 (80%)

Round 2: 10 (10%)

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Mean: 13,409

Median: 5,180

Std. Dev.: 33,484

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Mean: 80,800

Median: 37,731

Std. Dev.: 124,842

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0

10,0

00

20,0

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30,0

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40,0

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50,0

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60,0

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70,0

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80,0

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Northw est Missouri RegionalCouncil of Governments - 14

Northeast Missouri RegionalPlanning Commission - 13

Boonslick Regional PlanningCommission - 1

& SE Missouri Regional Planning Econ Dev Commission -18

Green Hills Regional Planning Commission -4

Kaysinger Basin Regional Planning Commission -6

Lake of the Ozarks Council of Local Governments -7

Mo- Kan Regional Council -12

South Central Ozark Council of Governments -17

Pioneer Trails Regional Planning Commission -16

Mark Tw ain Regional Council of Governments -8

Bootheel Regional Planning and Econ Dev Commission -2

Meramec Regional Planning Commission -9

Harry S Truman Coordinating Council -5

Ozark Foothills Regional Planning Commission -15

Mid-Missouri Regional Planning Commission -11

Southw est Missouri Council of Governments -19

Mid- America Regional Council -10

East-West Gatew ay Coordinating Council -3

538,871

262,463

141,805

Owner Occupied

Residences by RPC

Missouri Total: 1,535,202

Ave. by county seat:* 2,527

Ave. by county: 13,350

Ave. by RPC: 80,800

* 290,692 not including City of St. Louis

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Implementation Who? What? Where? When? Why? How?

CLEAN ENERGY DEVELOPMENT BOARDMEMBER COMMUNITIES

CITY / COUNTY

PROGRAMEDUCATION &

OUTREACH

ENERGY EFFICIENCYPROJECTS

PROGRAMADMINISTRATIONLOCAL STAFF AND

ADMINISTRATIVE TEAM

PROGRAM COUNSELPROGRAM MANAGER

Financial AdvisorUnderwriter / Bond Counsel

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Aggregation Process Think Carpooling

Property Owners

Property Owners

Property Owners

Property Owners

Property Owners

Property Owners

County City Village County City Village

CEDB/RPC CEDB/RPC

EIERA

Bond Issue

Bond Market or

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PACE Process Who? What? Where? When? Why? How? Steps

Communities Join Clean Energy Development Board (CEDB)

Accept CEDB Produces Policy Manual Develop Procedures with Regional Flavor Accept Applications from Property Owners Board executes Assessment Contracts Issue Revenue Bonds When Contracts are of

Efficient Scale Repeat as Demand Requires

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PACE Stakeholder PerspectiveStakeholder Satisfaction

(Stakeholder Wants & Needs)Stakeholders Stakeholder Contribution

(Organization Wants & Needs)

No Up-front CostReduced Energy CostInsulated From Future EnergyPrice SpikesIncreased Property ValueIncreased Home Comfort

Property Owners

Additional Disposable IncomeMore Energy IndependentCommunityHigher Assessed ValuationBetter Housing Stock

Revenue Neutral projects.Government provided financingfunds both the loans and theprogram administration costs.Meets expectation for provisionof services to community.

Municipalities &Communities

Little or No Demand on GeneralFundJobs Can't Be OutsourcedStimulates Local job creationthrough installation of efficiencyimprovements on privateproperty.

Improves economiccircumstance of communityFulfills desire for communityleadershipImproved quality of life

Policy Makers

Provides Job CreationOpportunitiesPromotes clean energy initiativesReduces reliance on foreignenergy sourcesProgress toward GHG reduction

Eliminates barriers to EEprojectsProvides expertise in energyefficiency and renewableproperty improvements

Contractors

Enhances community andeconomic developmentDevelops new market andimproves commerce

Virtually no risk of loss asproperty tax liens are senior tomortgage debt

97% of property taxes arecurrent & losses are < 1%Delinquent taxes earn up to18%

Investors

Financing mechanism is wellunderstood by municipalcorporationsSpecial tax revenue bonds areaccepted by the bond marketPrivate capital is virtuallyunlimited providing sustainability

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Existing Program Comparisons Who? What? Where? When? Why? How?

Source: Merrian Fuller Lawrence Berkeley National Laboratory

PACE ProgramLocation

Berkeley,California

Palm Desert,California

Boulder County,Colorado

ProgramStarted

Source of CapitalFinancing

MechanismCollection

MechanismEligible

MeasuresCredit Req. Security

Rate TermMax Amt

WhoProcess

App?

LocalGovtStaff

Results as ofAugust 2009

Nov 2008"micro" bond sold to

financial partnerSpecial Tax

(Mello-Roos)Property tax

billSolar PV(pilot)

Clear title &good propertytax payment

history

Seniorlien on

property

7.75%20 years$37,500

3rd Party1.25FTE

38 projects$28,000 ave /per

$1M committed

Oct 2008

Phase I general fund,Phase II

RedevelopmentAgency bonds, nowseeking a financing

partner for Phase III

Assessment(AB811)

Property taxbill

Energyefficiency,

solarthermal,solar PV

Clear title &good propertytax payment

history

Seniorlien on

property

7%up to 20 yrs.

No maxCity staff

1.5FTE

206 projects$36,000ave / per

$7.5Mcommitted

April2009

County issues bondsAssessment

(HB08-1350)

Property taxbill

Energyefficiency

and varietyof

renewables

Clear title &good propertytax payment

history

Seniorlien on

property

Varies(6.68% for1st round)

15 Yrs.$50,000

Countystaff w/

3rd party

1-2FTE

393 projects$19,000ave / per

$7.5M committed

Babylon, NewYork

August2008

Municipal solid wasterevolving fund

Assessment(amendedsolid waste

code)

Separatebill,

transfers toproperty tax

bill ifdelinquent

Energyefficiency,

solarthermal,solar PV

Clear title &good propertytax payment

history

Seniorlien on

property

3%term varies

$12,000City staff 3 FTE

169 projects$7,100 ave / per$1.2M committed

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Discussion & QuestionsJohn HarrisCountry Club BankColumbia, Missouri573-239-1136

www.midwestpace.blogspot.comwww.mocefllc.com