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.

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INNOVATIVE FINANCE: 300-level

SESSION 15

DATE // START TIME // ROOM NUMBER:

Wednesday, September 29, 2010 – 4:00 pm – Altman Gallery

ABSTRACT:

An exploration of the financial value of, and underwriting guidelines for, green buildings.

MODERATOR:

Daniel Winters, Managing Director, Evolution Partners

SPEAKERS:

Doug Lawrence, Managing Partner, Five Stone Green Capital

Additional speakers TBA.

DESCRIPTION:

An exploration of the financial value of, and underwriting guidelines for, green buildings. Representatives from private equity investment firms and lending institutions will discuss how they assess the additional value of green buildings and how this influences the structure of their investment and lending policies. The session will be moderated by Daniel Winters, Managing Director of Evolution Partners and Vice Chair of Capital Markets Partnership, the non-profit responsible for the ANSI-certified Green Building Underwriting Standards.

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INNOVATIVE FINANCE: 300-level

SESSION 28

DATE // START TIME // ROOM NUMBER:

Thursday, September 30, 2010 – 11:00am – Altman B

ABSTRACT:

A panel of experts discusses a new Deutsche Bank Americas Foundation and Living Cities study, examining the relationship between pre-retrofit savings projections and actual results, and aiming to develop principles for recognizing energy efficiency in multifamily underwriting guidelines.

MODERATOR:

Candace Damon, Vice-Chairman, HR&A Advisors

SPEAKERS:

Joshua S. Eisenberg, General Counsel, Urban America
Sadie McKeown, Senior Vice President, Director of CPC’s Hudson Valley Camp
Sam Marks, Vice President, Deutsche Bank Americas Foundation
Marc Zuluaga, Energy Analyst, Steven Winters Associates

DESCRIPTION:

Despite significant investment in energy efficiency over the past 35 years, many cite the paucity of good data demonstrating the reliability of savings as a critical factor limiting investment.  To address these challenges, The Deutsche Bank Americas Foundation and Living Cities enlisted Steven Winters Associates and HR&A Advisors to examine the relationship between pre-retrofit savings projections and actual results, to develop principles for recognizing energy efficiency in multifamily underwriting guidelines.  This panel will provide a preview of that study, and bring together lenders, owners, and energy and policy experts to diagnose the challenges of incorporating efficiency projections in underwriting guidelines and discuss principles for addressing those hurdles.

As a nation, we have been experimenting with various policy responses to the desire for greater energy efficiency in buildings for some 35 years.  Multifamily buildings, particularly affordable multifamily housing, have been a major focus of those efforts for that entire time period.  The vigor of these efforts has waxed and waned with changes in fuel prices, administrations, and, more recently, with growing awareness of the perils of climate change.  Yet over that time period, very little data regarding the relative efficacy of different installations and changes in operating procedure have been collected, analyzed or disseminated.  Lack of data impedes owners and managers’ willingness to advance sustainability programs, lenders’ interest in financing such programs, and governments’ ability to effectively support those programs.  Indeed, many cite the paucity of good data demonstrating the reality and reliability of savings as a critical factor in limiting investment.

To address these challenges, Steven Winters Associates and HR&A Advisors undertook a study that examines the relationship between pre-retrofit savings projections and actual results, in order to develop principles for recognizing energy efficiency in multifamily underwriting guidelines.  The study combines the engagement of a wide variety of interdisciplinary perspectives with the analysis of more than 300 building retrofit projects, and is expected be completed in fall 2011.

The discussion will be divided into three parts, followed by 15 minutes of audience question-and-answer:

1. A detailed diagnosis of the challenge of incorporating energy efficiency in underwriting guidelines, from the diverse perspectives of the panel members with specific focus on the prevalence of and reasons for divergence between predicted and actual results of investment in energy efficiency in multifamily buildings.
2. A discussion of principles for overcoming hurdles, recognizing best practices being undertaken across the globe.
3. A preview of the Deutsche Bank/ Living Cities study currently underway, and how the work will address the issues discussed above.

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