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Overview of Property Assessed Clean Energy (PACE) Program A Unique Option to Finance Your Overview of Property Assessed Clean Energy (PACE) Program A Unique Option to Finance Your Energy Initiative

Executive Summary PACE Property Assessed Clean Energy • Chapter 187, passed in 2011, creates Executive Summary PACE Property Assessed Clean Energy • Chapter 187, passed in 2011, creates the ability for municipalities to place Clean Energy Special Assessments on existing properties at the request of the property owner through the adoption of a special assessment ordinance • Municipalities that adopt the special assessment ordinance may utilize a County Improvement Authority to issue bonds secured by the assessments in order to fund clean energy improvements THERE ARE NO MUNICIPAL FUNDS AT RISK

Why do property owners use the program? • 100% FINANCING/PRESERVATION OF CAPITAL – As Why do property owners use the program? • 100% FINANCING/PRESERVATION OF CAPITAL – As the program can finance 100% of costs, a property owner does not need to contribute new equity to the project. • BALANCE SHEET – Collateral is the assessment on the property, not the owner’s credit. • TRANSFER OF PROPERTY – In addition to the capital improvement and cash flow benefit, the repayment obligation runs with the property until fully paid and not the property owner. • TERM OF FINANCING - The Assessment lasts for the life of the asset creating an immediately positive net cash flow. Conventional financing usually has a limited term that puts short-term strain on cash flow. No acceleration of loan.

Public Policy Benefits • JOBS – increase of temporary and permanent jobs. Every $1, Public Policy Benefits • JOBS – increase of temporary and permanent jobs. Every $1, 000 in assessments will create/preserve 17 jobs. • IMPROVED PROPERTY – allows aging properties that need capital improvements to be viable by making improvements affordable • CLEAN ENERGY – reduces carbon emissions and pressure on grid Source: American Council for an Energy Efficient Economy 4

Existing PACE Legislation Source: pacenow. org ü 31 States adopted PACE legislation ü 17 Existing PACE Legislation Source: pacenow. org ü 31 States adopted PACE legislation ü 17 States have active PACE programs ü 33 Active PACE Programs in those 17 States ü 16 PACE Programs have funded projects in 7 States

Team Approach Executed first PACE securitization Highly Rated Bank (A 2, A+) Committed Loan Team Approach Executed first PACE securitization Highly Rated Bank (A 2, A+) Committed Loan Capital to PACE program in NJ National Engineering Firm with 23, 000 employees Super ESCO Program Administrator for Florida PACE Proprietary PACE software solutions Experienced Tax-Lien Investor Committed Equity for PACE programs New Jersey’s leading Financial Advisor Leader in Improvement Authority Financings 4 Deal of the Year Awards 6

Process for Property Owners • There are 8 general steps for a property owner Process for Property Owners • There are 8 general steps for a property owner to obtain financing: ― Step 1: Property Prequalification ― Step 2: Submit a formal application ― Step 3: Obtain Contractor Estimate ― Step 4: Contractor Bid Summary to Underwriting ― Step 5: Project Approval by Agency ― Step 6: Closing, Lien Placement, and Notice to Proceed* ― Step 7: Work Performance ― Step 8: Property Owner Approval (and Final Payment) * Although work may commence prior to issuance of the Notice to Proceed, any such work would be conducted at the sole risk of the contractor. 7

The Process q STREAMLINED & STRAIGHT FORWARD: • A simple step by step guide The Process q STREAMLINED & STRAIGHT FORWARD: • A simple step by step guide explaining the process of a Commercial project from inception to completion. 8

Steps 1 - 4 • Steps that outline the project process from determining eligibility, Steps 1 - 4 • Steps that outline the project process from determining eligibility, through project submission. q ELIGIBILITY - Property Owner evaluates potential benefits - Property Owner reviews eligibility requirements - Property Owner completes application q SUBMIT APPLICATION - Property owner provides property information - Property owner provides lender information and consent - Property owner identifies qualifying improvement(s) q OBTAIN ESTIMATES - Property owner reviews list of eligible contractors - Property owner obtains estimates from one or more contractors - Property owner selects preferred contractor q SUBMIT PROJECT - Selected contractor prepares project proposal - Property owner submits project proposal to Leidos 9

Steps 5 - 8 • Steps that outline the project process from agency review, Steps 5 - 8 • Steps that outline the project process from agency review, through the issue of final payment. q Project REVIEW - Leidos validates Contractor - Leidos validates Property Owner - Leidos communicates project review to contractor and Property Owner. - Leidos validates cost and savings - Leidos approves project q SCHEDULE CLOSING - Leidos collaborates with property owner to establish a closing date for the financing. - Leidos and property owner execute financial documents and the contractor is given notice to proceed. q INSTALL IMPROVEMENT - Contractor obtains permits - Contractor completes installation - Local building official approves permit q FINAL PAYMENT - Contractor submits a final payment package to the Property Owner for approval. - Leidos reviews the final payment package, approves then issues final payment. 10

Eligible Measures • Must be permanently affixed to the property. • Requires an energy Eligible Measures • Must be permanently affixed to the property. • Requires an energy assessment to validate the correct relationship between cost and expected energy savings • Assessment can include costs for permits, inspection, energy analysis, engineering and design, assessment origination, recording and collection fees. • Allowable Projects: v Energy Efficiency v Renewable Energy v Flood Mitigation (pending in NJ) • Eligible Properties: v 1 -4 Family Residential v Commercial/Industrial/Multi-Family > 5 families v Religious or Non-Profit v Healthcare v Educational v Agricultural 11

Benefits to Local Governments • New opportunities for investment • Employment growth and economic Benefits to Local Governments • New opportunities for investment • Employment growth and economic development • Increasing the value of the area’s building stock • Reduce the stress on the local infrastructure • Increases community resilience • Supports state and local conservation and sustainability goals and Clean Air Act nonattainment levels • No need for public funds or administrative assistance • Once established, can be self-sustaining • Supports disaster preparedness 12

Benefits to Mortgage Lenders • Assessment mechanism is well understood • Increased Net Operating Benefits to Mortgage Lenders • Assessment mechanism is well understood • Increased Net Operating Income improves mortgage coverage • Increased value of collateral outweighs lien exposure • PACE can finance needed capital improvements with no additional debt • Amount of a PACE assessment is small compared to the value of the related property • The maximum LTV for PACE assessments is initially 20% 13

Benefits to Contractors • Creates more work for contractors • On-demand access to program Benefits to Contractors • Creates more work for contractors • On-demand access to program training • Recognizes and rewards ethical business practices • Lower cost and more flexible financing terms • Standard set of rules and procedures • Prompt and direct deposit final payment • Technical support • Prominent exposure • Access to professionally-developed marketing collateral • Potential for special program equipment promotions 14

“Best Practices” Highlights • Owner must be current on their property taxes and mortgage “Best Practices” Highlights • Owner must be current on their property taxes and mortgage – limited look back • Mortgage-related debt on the property is limited with respect to the assessed or appraised value • Proposed assessment must not exceed a stated percentage of the assessed value • Assessment and mortgage debt must not exceed 100% of the market value of the property • The total annual property tax and assessments, including the contractual assessment must not exceed a fixed percentage of the property’s market value • Endorsed by White House and DOE • Accounting and tax treatment similar to property taxes 15

Property Owner Benefits • Up to 100% financing can be provided for qualifying improvements Property Owner Benefits • Up to 100% financing can be provided for qualifying improvements • Up to 20 years to pay based upon the weighted average life of the improvements • Off balance sheet financing as a special assessment is placed against the property and collected with property taxes • Special assessment may be tax deductible 1 • Special assessment can remain with the property upon title transfer (sale, transfer, refinance or foreclosure), or retired as a negotiable term of sale • Federal Tax Credits or rebates, which can be utilized or monetized, are available for many energy related improvements • Simple paperwork. Low set-up costs; use of existing Appraisals and Environmental Studies; no Notes or Security Deeds are filed against the property • All work must be permitted and approved by local building department • Work performed by qualified and licensed contractors 1 The tax deductibility of this assessment may vary due to internal accounting standards. Please verify with the appropriate tax consultant. 16

Presenters • Please contact any of the presenters if you have any questions. ― Presenters • Please contact any of the presenters if you have any questions. ― Dan Mariniello - (201) 656 -0115 - [email protected] com ― Hamilton Mc. Lean - (407) 648 -3597 – hamilton. s. [email protected] com ― C. J. De Santis - (646) 291 -6890 – cj. [email protected] com ― Ryan Donavan - (212) 250 -8257 - ryan. [email protected] com 17