Green Condo Financing

1. Green Condo Financing

2. About TAF • Our role: Incubating climate solutions • Established by City Council in 1991, TAF has provided $20 million in grants to the not-for-profit sector and City Agencies to accelerate the reduction of GHGs in Toronto • Not on the City’s Tax base – TAF’s endowment revenues are used to provide grants and its capital may be used to invest in private entities up to $2 million without Council Approval (equity and debt) • TAF is flexible, innovative, independent, unique

3. About TowerWise • Four focus areas including TowerWise – energy efficiency in high-rise homes • Residential sector responsible for >40% of Toronto’s GHG emissions • Addressing the financial barriers to higher performance buildings

4. Origins of the Green Condo Loan Program Challenge Opportunity Market gap Leverage Energy efficient high rises cost more to build Energy efficient buildings cost less to operate Condo builders pay the extra costs but don’t reap the benefits Condo Corporation could save >$100,000 per year

5. Financing challenge • Financing repayment of capital cost from expected future savings from reduced energy costs “unprecedented” • Commitment today for a draw-down of funds 3 years or more into the future • Condo Corporation has no track record of repayment (banker’s dream deal!) • Market size – 120 buildings per annum max – likely 60 - @$500k per – small market across 6 major institutions (that also want deposit business)

6. But big potential benefits Developer, residents and society all benefit in different ways But group receiving the most direct benefit – residents – takes direct responsibility for costs

7. Building it up • Need to make this solution: • Scalable • Catalytic • Transformative • Non-proprietary

8. Why we need this solution • Energy performance of a 2-year old condo can be easily improved by 30%. Clearly there is an opportunity for improvements from the very start of construction. • Condo sector growing rapidly – as many as 50 new buildings a year in Toronto.

9. How it works Leveragable green dividend

10. How it works • Incremental cost financing without increasing prices for Green Condos • Leverage life cycle savings that accrue to the Condo Corporation • Minimize capital cost barriers for Green Condo construction – Invest in building not in recurring energy costs • Secure financing on condo building assets and cash flow

11. Partnering with Tridel The Lender: Toronto Atmospheric Fund The Developer: Toronto’s leading condo developer (1.5 million square feet annually) Stage 1: Proof of concept loan Stage 2: Syndication of commercial product

12. The Verve Case Study The Loan: $475,000 from TAF The Result: LEED Building with 35-40% energy savings Plus: 900 tonnes of CO2 emissions avoided per year (>2 tonnes per dwelling) • Good market acceptance • Affordable energy efficiency • Success!

13. Phase 2: Leveraging bank financing METROGATE LEED-ND COMMUNITY SOLARIS I & II GREEN FINANCING: >$1M >2500 tonnes GHG avoided in total REPUBLIC CONDOMINIUMS (LEED-Silver Candidates) LEVERAGED GREEN FINANCING: $1,000,000

14. And more . . . NUVO II LEED Candidate 35% Energy Savings LEVERAGED GREEN FINANCING: $500,000

15. And more . . . GRAND TRIOMPHE II LEED Candidate 35% Energy Savings LEVERAGED GREEN FINANCING: $500,000 MONARCH CORPORATION - Red 33% Energy Savings

16. The outcome so far • Initial TAF investment with Tridel: • $1.5 million • Current Leverage with Tridel’s lenders and potential boutique financing (20% TAF Guarantee) • $5 million and growing • New TAF Borrowers: • Monarch Developments • Remington • Other cities examining TAF’s model: • New York • Chicago • Seattle • Melbourne & Sidney, Australia

17. Stay in touch www.toronto.ca/taf And coming in December: www.TowerWise.ca Tim Stoate – 416-393-6368 tstoate@tafund.org