INNOVATIVE FINANCE: 300-level
SESSION 18
DATE // START TIME // ROOM NUMBER:
Wednesday, September 29, 2010 – 4:00pm – Metro 2C
ABSTRACT:
This panel will provide an update on the current challenges faced by the Property Assessed Clean Energy (PACE) financing model. The panel will also provide an overview of other public/private efforts currently under development whose goal will be to deploy a multi-pronged strategy to accelerate the creation of a scaled cross-sector energy efficiency retrofit market in New York City.
SPEAKERS:
Neal J. Parikh, Senior Policy Advisor, NYC Mayor’s Office of Long-Term Planning and Sustainability
Greg Hale, Senior Financial Policy Specialist, Natural Resources Defense Council
Michael Karlosky, Director, Sustainable Public Infrastructure, Wells Fargo Securities
DESCRIPTION:
It is widely recognized that difficulty accessing capital deters many property owners from retrofitting their buildings. Over the last two years, twenty-three states, including New York, have enacted legislation authorizing the development of municipal financing programs known as Property Assessed Clean Energy (“PACE”) programs. The DOE’s “Better Buildings” (aka EECBG) awards allocated over $450 million in federal funds to help states and cities set up and implement energy efficiency retrofit programs, including approximately $150 million earmarked for PACE financing. However, the Federal Housing Finance Authority (FHFA), and their regulated entities Freddie Mac/Fannie Mae, along with the Office of the Comptroller of the Currency (OCC) as regulator of the nationally chartered banks, have taken various actions this summer that have effectively halted PACE programs, leaving municipal governments scrambling to develop alternative efficiency retrofit financing programs.
Greg Hale will provide an update on the current status of the federal impasse with respect to PACE residential and commercial programs, in the aftermath of this summer’s regulatory actions, and will discuss the current strategies to rescue PACE programs through federal legislation, litigation and possible negotiated solutions. He will also present an economic cost/benefit analysis which analyzes the risk from PACE to existing mortgage lenders in the context of the economic activity that would be generated by the PACE-financed retrofits.
Michael Karlosky will then discuss PACE Commercial programs from the perspective of a lending institution, including a look at the prospects for PACE Commercial in light of the recent OCC bulletin, and his thoughts on how a financial institution might develop an internal set of metrics to apply when asked to subordinate an existing commercial loan to new PACE financing.
Finally, Neal Parikh will provide a perspective on PACE Commercial from Mayor Bloomberg’s Office of Long Term Planning and Sustainability – including concerns that would need to be overcome in Albany. He will also discuss the City’s other efforts, in collaboration with philanthropic and private actors, to help finance a range of retrofit transactions in NYC, while also focusing on local demand generation and economic and workforce development that will be necessary to create a full scale multi-sector energy efficiency retrofit market in NYC. These efforts aim to create a potential model for municipalities that seek to leverage committed federal resources with private capital in order to scale up a local retrofit market in the service of public goals without additional public cost.
