NH C-PACE Energy Project Financing Program Overview

1. NH C-PACE Energy Project Financing Program Overview November 19, 2016 Scott Maslansky C-PACE Program Manager The Jordan Institute

2. Who Are We? For-profit company, majority owned by The Jordan Institute Scale-up number of energy-efficient buildings Expand available EE services - projects in the field including energy-centric construction management • Non-Profit organization • Reduce energy use in buildings • Public policy and program design • Founded in 1995 2013 Strategic Plan & Reorganization 2014+ Policy and Program Design 2016 C-PACE Program Launch

3. Why C-PACE? • Goal: Expand the number and scope of energy efficiency and renewable energy projects in New Hampshire. • Objective: Expand energy efficiency and renewable energy financing tools - especially to meet some of these needs… • Extend repayment terms • Reduce risk for investors/lenders • Overcome the split incentive • Assure project quality / energy savings

4. Is My Project Cost Effective? Financial • Simple Payback • Return on Investment • Internal Rate of Return • Net Present Value • Cash Flow Positive? How do I measure “effective”? Comfort • Tenant/employee complaints • Improved productivity Necessity • Equipment at end of life • Code issues http://www.epmechtech.com

5. Payback • Simple payback Total Cost_________________________________ = Payback in years Annual Savings • Does not account for savings beyond payback period.

6. Financials Example Weatherization Project • Cost: $10,000 • Annual Savings: $1,500 • Simple Payback: 6.7yrs. • Return on Investment (ROI): 15% • Life of Measure: 20 years • Discount Rate: 6% • Net Present Value (NPV): $7,205

7. Does Comfort = Savings? Employee Productivity Comfort: • Too hot/cold  less focus • Glare & light levels  eye strain, headaches, mistakes • High CO2 levels fatigue Costs of Energy vs. Personnel: • $40,000 average salary and benefits per person. • 200 square feet per person. • $200 per square foot in payroll vs. $2 per square foot in utilities. • Payroll is 100 times as expensive as energy per square foot! Even a 1% increase in productivity can have significant $ impact! Source: sellingenergy.com

8. C-PACE Definition • C-PACEProperty Assessed Clean Energy financing for Commercial buildings • Allows building owners to tie financing for energy efficiency and renewable energy improvements to a property through a Special Assessment lien.

9. C-PACE Definition • NH Statute: RSA 53-F • Rewritten for 3rd time in 2015; • Unanimoussupport -- NH House and Senate • Enabling legislation • Municipalities voluntarily adopt RSA 53-F to set up C-PACE Special Assessment Clean Energy Districts.Jordan Institute and partners launched the NH C-PACE program in 2016

10. Why was C-PACE created? • To overcome the significant obstacles for commercial building owners to completeEnergy Efficiency and Renewable Energy projects – especially comprehensive projects • By using the municipal tax structure, building owners can overcome these obstacles and benefit from high-quality, comprehensive, and cash-positive energy projects

11. Why was C-PACE created? Common Situations Results Commercial Building owners flip Owners rarely get full benefit of long buildings every 5 - 7 - 10 yrs. term cost savings - - – - Commercial loans = 5 7 yr. terms Focus on “low hanging fruit” project paybacks of 2 7 yrs. Loans repaid from capital budgets Limited funds for comprehensive projects Projects deferred until emergency Limited time/money to consider options Who pays for utilities? Tenant not invested in upgrades for building they don’t own; owner not invested if tenant pays bills

12. C-PACE Benefits: Building Owner • Tied to the property, not the property owner • Non-accelerating payments upon sale • Next owner receives the same benefits and payment obligations – “Pay for the energy efficiency you use” • No down payment required • Cash Flow Positive, Savings to Investment Ratio >1 • Loan Term up to 30 years • May be treated as operating expense - instead of debt • May address “Split incentive” - owner can “share” loan repayment with tenants (ie triple net lease) • Encourages comprehensive projects, not just fast ROI • Financial & energy project vetting/oversight/verification -improves trust

13. C-PACE Benefits: Municipality • Improve building stock • Attract/retain businesses • Fill rentable space • Increase value of commercial buildings • Budget-neutral economic development initiative • No public or ratepayer funding • Ties into goals and initiatives in the Master Plan • Stimulates local jobs by expanding markets for EE/RE contractors • Vast majority of efforts handled by others • Nominal payment to Municipality to cover costs as conduit for tax/repayment

14. C-PACE Building Types Can Include: • Office buildings • Hotels & convention centers • Apartment buildings (5+ Units)* • Manufacturing facilities • Heated warehouses • Agricultural buildings • Retail: grocery, malls, big box, Mom & Pop • Health clubs & athletic facilities • Private Schools • Non-profits • NO PUBLICLY OWNED BUILDINGS • NO RESIDENTIAL (1-4 units) • NO NEW CONSTRUCTION * Some Restrictions Apply

15. C-PACE Projects Can Include: • Comprehensive projects or individual energy measures • Airsealing & Insulation • HVAC • Biomass Heat — pellets or chips • Ground-Source and Air-Source Heat Pumps • Controls and heat distribution • Lighting • Solar – electric, hot water, hot air • Combined heat and power • non-energy project work that is connected to the energy project, as long as the SIR>1 (ie roof replacement with solar project) • Projects > $250K

16. The National C-PACE Scene 32 states have adopted PACE financing tool Courtesy PACENation To date, 790 Commercial buildings upgraded, $280M, 3,300 jobs

17. Current Obstacles • No completed projects in NH to show precedent • Need examples to get range of rates/terms • Lien position has created significant uncertainty in who will invest • NH tax law significantly different from other C-PACE states • Existing tax software varies among municipalities

18. NH C-PACE Adoption Status • Participating Municipalities: • Hanover – 2 prospects in early stages • In discussion with: • Dover • Concord • Lebanon • Keene • Portsmouth • Durham

19. Next Steps for Municipal Adoption • Support from Municipal Energy Committee • Work with Municipal Staff • Tax software • Implementation/ enforcement concerns • Present to City/Town Council or or C-PACE added to Town Meeting Warrant • Review template resolution, agreements, lien documents • C-PACE adoption! at Town Meeting or City/Town Council

20. Thank you! Scott Maslansky, C-PACE Program Manager The Jordan Institute smaslansky@jordaninstitute.org 603-226-1009, x202 6 Dixon Avenue, Suite 201 Concord, NH 03301 www.cpace-nh.com

22. NH C-PACE Program Team • Jordan Institute, Inc. – Statewide Administrator, Day to Day Coordination, Visibility, Education, Project Management • Sustainable Real Estate Solutions, Inc. – Energy Project Origination/Development, SIR Analysis, Contractor Training. • Resilient Buildings Group, Inc. – Energy Project Vetting, Commissioning, M+V • NH Community Development Finance Authority – Financial Vetting, C-PACE Loan Repayment Coordination, Project Warehousing