all that we share transcript


The Public Housing Authority opportunities I would reference the Rental Assistance Demonstration project, RAD, that there are opportunities to apply PACE to projects in that structure. A pleasure. Subscribe to Film English to receive notifications of new lesson plans and viewing guides. But it's definitely a long-term you know, I think there was some interest there, but some of the realities kind of took over and the fact that there was some turnover of the folks that we spoke with, and it was just kind of hard to gauge back to the transition, which the conversation which also went to Peter's note of just struggling with competing priorities, just daily activities. And so on an existing building generally what we see is that we have PACE lenders that will finance in the 20 to 30 percent up to 30 percent of the appraised value of the property, and of course there generally has to be about ten percent equity above and beyond that PACE amount for PACE to kind of come in. So let's go to the next slide. Sorry for that acronym there, which is completely unpronounceable, but MFAH we shorthand for multifamily affordable housing. But maybe if the question is asking if the for example, let's just say that a property has a $10 million just for easy numbers, but a $10 million valuation and 50 percent outstanding debt is all there is, so you have 50 percent equity in the property. SPEAKER 16: You can sometimes expect a little bit of people ego. Chris, this is another question for you and it kind of harks back to the case study we talked about before and kind of the thresholds, dollar amount that was used for a new construction project. SPEAKER 3: I dont think you could really put it into words, but its the fact that all of us love to work together. Ive been using this the video in my classes for some time now.

And there are an increasing number of PACE providers that are that recognize that the success of any participant at this stage in market development is a success for all, and we encourage all to share their successes and let others know. So why today's topic? Thank you. So very often Commercial PACE may have come to the table saying, "Oh, here, we can provide this amount of money at this interest rate for this length of time." The eligibility criteria are different and there are many cases in which there may be limitations, for example, on dollars per unit under traditional financing, and PACE can exceed those numbers and can fill a valuable role there in getting you to completion. So there's a virtuous cycle here of PACE financing bringing further opportunities to the low-income housing investment tax credits. And also I'll highlight that to date close to $60 million in C-PACE investments has gone towards multifamily properties. Sean Williamson: Gotcha, okay.

However, this is key for understanding PACE, because as you look at those 2,000-plus projects that Elizabeth mentioned on a previous slide, you can safely assume that the vast majority of those projects had existing mortgage _____ financing on them, and every one of those PACE projects took place with the consent of all existing lienholders involved. Then I'll turn it over to our presenters. So here's a summary of self-funding versus PACE, and the again PACE increases the tax equity basis, which provides an opportunity to leverage additional low-income housing investment tax credits, a great example of the fact that while PACE financing is complicated, so is multifamily affordable housing financing. Sean Williamson: Thanks, Elizabeth. So back to the slide here. I'm not sure if we had the metering data. They were very interested in PACE being an additional source of financing. Just as a quick we actually had Bracken Hendricks and his small team out to Cincinnati about three or four years ago and we did have an initial meeting with our local public housing authority, which is actually come to find out our local utility's largest customer, which shows you how many properties they have under their umbrella. And when you think about the disruption and innovation, we really are, we are turning the industry upside down. This ESL lesson plan is designed around a short video titled All That We Share by Danish TV channel TV2Danmark. That obviously one would think would not apply to most multifamily affordable housing situations, which have much longer ownership terms. Kieran. Great. So there still has to be a little bit of equity in there. All right, so before we kind of get into the case studies, I did want to just kind of make a point so that it's not missed from the standpoint of on really kind of the open market on new construction. That picture right there is the Phyllis Wheatley YWCA, which is an actual PACE financed project. All right, go on go to the next? And so just kind of the rough numbers there, that $29 million was what the total project budget was. All the best,

The company encourages you to make mistakes, and make mistakes early, to fail early, and to learn from them. And what best practices and case studies are available? Im happy you like it.

It was improving the quality of the collateral against the loan. They required that the assessment be sent with the be collected with the tax bill, and that was in response to some early programs that essentially, you know, they called themselves tax assessments but in many ways they acted just like a traditional mortgage secured loan. So, I WILL definitely use this plan to better know who my students really are. If somebody's taking out additional financing, it may mean that they're in quite a bit of financial trouble and an existing lienholder wants to know about that before it happens, not after. Good idea to edit the video if youre using it with younger children. And if we look at those units on the whole, we've got about 2.6 million that are voucher-based and about 1.5 million units across the country that are project-based. But so I just wanted to kind of show this so everybody's kind of familiar with what we're doing, in case you hadn't seen this one. We're gonna give folks another minute or two to log on and get situated and we'll get started soon. Prioritizing PACE projects at minor financing points, _____ capitalizations to minimize what the jargon is brain damage. And then suddenly, theres us. People don't have the bandwidth. And the last point, just to mention the USDA Rural Development is a complement to HUD and some projects that might qualify would take place in non-urban areas. There are enough projects in the pipeline that you can look to the next major refinancing event and incorporate PACE planning in that. It is one of the most commonly used mechanisms for affordable housing finance now, and those are structured as 15-year deals. In the lesson students talk about the communities they belong to, find out what they share with their classmates, watch and discuss a video about what a community shares. Even so, those numbers are almost certainly not the whole picture and they're probably more than that. What does that mean? We are committed to providing reasonable accommodations for all qualified individuals with a disability. Folks are just logging in and getting situated for the webinar. The money is a straight return with no there's no return on investment because there was no investment. We're gonna give probably another three to four minutes for folks to get their visuals and audio up and get situated and we'll get started soon.

Forrestal Building1000 Independence Avenue, SWWashington, DC 20585, Principal Deputy Assistant Secretary's Office, Weatherization and Intergovernmental Programs Office, About Office of Energy Efficiency & Renewable Energy, Transcript for Commercial PACE for Underserved Market Segments: Multifamily Housing. So why not more uptake? Thanks, Sean. This one had actually been discussed for quite some time. Elizabeth Chant: Yeah, the only thing I'll add is that the on one of Peter's slides there was reference to LIHTC, the Low-Income Housing Tax Credit program. That has been around since 1986. I think it's worth the effort to put the extra time in researching _____, to meeting with people and so on." And those just getting by. I encourage folks to check out the LEAD tool and explore it on your own time, but it can be a fantastic tool to help inform these decisions. How did that technology differ from what would've normally been installed? This figure specifically is from Rochester, New York, and it tells us about the housing stock, renter-occupied versus owner-occupied, and the distribution of income across those housing types. I guess one thing I would mention about myself, that I do have experience with regard to PACE in Kentucky and PACE in Ohio, so that's kind of the market territories where I'm most familiar. So we share the same value and we care about each other. There'd be a specific project that there was some compelling reason to look at now, PACE financing being a route to make that happen, and then trying to true up all of those maturity dates at the next recapitalization event. Hi Luminita, So in Ohio we have villages, townships, and cities. Two of the parcels were actually city-owned, and so what happened there was that the city actually acquired the third parcel and then ended up doing a ground lease to the developer. - Who in this room was the class clown? This is just one example of the types of outputs the LEAD tool can generate. Those four nonprofit organizations have been principally funded in their EEFA work by the JPB Foundation. Again, this is discussed in greater detail in the report. And properties that are not master-metered are just _____ into that buzz saw, where the cost of the financing is not going to turn into reduced operating expenses for the person spending that money. But for the most part multifamily is considered an eligible property type under Commercial PACE enabling statutes. All the best, Just a bit of housekeeping. Next slide, please. So we're always kind of happy and thinking about that. Sean Williamson: Fantastic. Palo Alto Networks is an equal opportunity employer. Just happy you like the lesson and video. Next slide? Sean Williamson: Yep, we can hear you, Chris. SPEAKER 12: Engaging in a way that is collaborative and drives value towards meeting the mission and vision of the company. Do we know how often recapitalization happens, is there a way to predict is, or is there a potential role for local economic development authorities, housing authorities to kind of know when that might happen for different properties so they can get ahead of this and introduce the option of PACE to different property owners? I hope your students enjoy the lesson and video as much as you do. It means it's tied to the property, not to whoever happens to currently own it. Chris Jones: All right, very good. I always tell the team we cant do this by ourselves. And so I think on this particular one I think they did increase some of the energy efficiency numbers to once PACE got involved. - Who are stepparents?

And then through the city's capacity _____ Kentucky _____ industrial revenue bonds, they were able to provide some tax abatement incentives there. First on the energy savings opportunity, there's close to 18 million market rate and affordable multifamily housing units in the US. I am going to ask you some questions today. EEFA started about six years ago and it has done enormous amounts of work on the advocacy front, on the research front, and specifically even on the project front in the 13 states and jurisdictions that are highlighted on the map there. All right, I think we're good to get started here. This is Commercial PACE for underserved market segments, multifamily housing. The state of New York, as in so many other was, led the field, and I would point you out to page 32 of our report which has the letter from the New York State Attorney General which completely met the requirements of HUD, and we included it and got some very positive feedback that it was useful in people's conversations with other states. So a couple definitional terms. We who feel lonely. We conducted lots of interviews with programs that were particularly of interest to EEFA because of the state-by-state approach they take. Elizabeth Chant: This is Elizabeth and I don't know the answer to that question of the deals that we looked at. Elizabeth, anything to add to that? And don't forget that Rural Development is a complement to HUD. So it is an expense sheet item, in summary. Hi Liana, And then what can we learn from one of the first Commercial PACE financed multifamily new construction projects in the US? It's almost five past the hour. Those comprise about a million units, which is seriously down from four to five years ago, but there are about a million units of public housing in the US. And then, as I said prior, we've got close to 20 minutes for Q&A towards the end of our 90 minutes. PACE was originally designed to meet a specific need, and that specific need was a recognition that many people do not do energy improvements on their own buildings, whether residential or commercial, because they're concerned that they will not be in the property for many years to come and that the savings that they enjoy might just cover the cost of doing the projects and they won't be around to reap that benefit. Slide? All right, so two quick slides about our recommendations from the report of best practices. Those are definitely the major underwriting requirements, and so just wanted to touch base on that as well. Click here on play and Ill read all the text. And so they might contact somebody, you know, three years before the next recapitalization to initiate a conversation so that by the time that date rolls around they have the financing in place. And then you historically have mezzanine or preferred equity coming into a CLA capital stack, plus owner's equity. Its been a very positive experience and Im just so happy. This one really worked out to where we had a very high involvement from the actual city because it the property itself, I won't bore you with a lot of the details, but basically there were three parcels that this project actually was built on. But happily a few deals did happen, as I mentioned. Go to the next slide. SPEAKER 7: We learn every day. And so on, so that line really stuck with me, that to say all they have is money, and it's a reminder that although we're focusing today on the financial aspect of PACE, it really only works _____ considered in the larger context of understanding the project, having the right technical support, and so on. Those 15 deals comprised about $68 million in multifamily affordable housing financing. And again this is more kind of market rates. We need to focus on what unites us, instead of what doesnt. So connecting and also, as Peter pointed out, there is a requirement by HUD that HFAs actually play a role here. But when they talked to a potential PACE provider at that time, the questions that weren't getting answered were is this amount of money the right amount of money?

This first one is for policies and programs. Well, most Commercial PACE enabling legislation generally includes multifamily housing as an eligible property type, and this is usually defined as four or more dwellings. And Elizabeth and Peter will get into the details of this in just a bit. As a reminder, the purpose of the Commercial PACE working group technical webinar series is to provide in-depth technical knowledge about program elements to state and local participants in DOE's C-PACE working group, and in particular we task the market experts and those with a lot of case study experiences to frequently speak on these webinars, and that's exactly what we've got for you here today. Chris, we'll give you the last word if you have anything to add on how to do outreach with prospective developers to originate projects. And if that utility allowance is able to be reduced, then became what the resident pays is maximized at 80 percent of their income, if the utility allowance can be reduced, there actually is a mechanism for more of the resident monthly payment to end up in the owner pocket. So this is our last question and it's a good one because we've got a number of third party program administrators and capital providers and state and local governments on the call. But in Ohio we do not our allowable for counties to become PACE eligible is at the local jurisdiction. But also those agencies know all of the affordable housing developers because they are doing deals with them all the time. Careers Site Design by Ph.Creative, This website uses cookies. Unfortunately I cannot use it in class because I teach young learners. And _____ a PACE program and they said, "All they have is money," I thought was really funny because everyone's saying, "We need money; we're looking for money." So if you think of opportunities for energy efficiency, it can happen on a discretionary basis or it can happen at the time of systems upgrade or building upgrade. Basically if there was an active program showing up in PACENation back in it was spring of 2018, we reached out to the program administrators, got on the phone with them, and talked through what was the deal flow they had seen so far? There are those we share something with.

And so the owner from my understanding was looking at this particular project and I believe owned the ground for a couple years and then learned of PACE and really kind of accelerated the development once the financing was in place. What we're looking at here is a not-atypical project where there's a variety of costs, acquisition, hard costs that will be necessary for the energy conservation measures, soft costs likewise unavoidable, in this example for a total of $52 million. First up is Elizabeth Chant and Peter Adamczyk. Next slide, please. You know, we'll kind of walk through each of these, but Covington, Kentucky, for those that don't know, is literally right on the Ohio River across from Cincinnati, downtown Cincinnati, so kind of the extreme northern Kentucky area. Sean Williamson: Got it, thank you. And I'll mention this in a bit, but there are some instances where state-enabling legislation does not actually including multifamily housing as an eligible property type. PACE's eligibility is based on a different set of criteria and there are frequently cases where PACE a project can be eligible for PACE financing when it has exhausted all existing financing opportunities. You know, my firsthand experience has seen that once a developer has used PACE in this context once, they're continuing to use it multiple times. Is this what it should be invested in? And then last, the owners just struggle in this affordable housing world owners are struggling with so many competing priorities that it's just sometimes very difficult to get their attention. The duration is 90 minutes.

We who are broken hearted. Hi Linda, Let's say it was halfway. Read more. A brilliant idea for those who teach teenagers and adults. Sean Williamson: Great, thank you. There seemed to be a lot of juicy examples in there and important takeaways that folks can reference for the next at least five to ten years as this market takes off.

The collective potential for cost-effective energy savings is over $3 billion within this market segment. I watched this video a couple of months ago. SPEAKER 1: I came from an era when you when something was disruptive, it was seen as negative. For multifamily affordable housing owners and operators, in case we haven't said this enough times, what we're pointing out to you is that PACE can serve a valuable role as gap financing. A reminder about how important embracing diversity is. As I said, the complexity of the financing and the deal structure, just trying to get even something as simple as trying to get approval of all those different financial partners and Peter will talk a little bit about that. And so I don't know if there's kind of some suggested national group, other kind of approaches that folks have taken? Try mSpy Phone Tracker for Your Kid's Safety. And so one of the things can be that there could be someone who says, "I just don't want this to happen until such and such a date in the future," and so they're not gonna actively sabotage you but they have no incentive at all no economic incentive, I should stress, to participate in any financing midstream. And the reason for that again, a quote was that one of the bankers said that they loved owing money to themselves basically 'cause they were comfortable with the credit risk. Specifically state and local Commercial PACE program sponsors are interested in making sure their programs serve multifamily housing.

Elizabeth and I would be happy to hear from anybody with any follow-up questions. I will also I guess say that I think the city of Covington, once we were done with this project, also kind of saw with a different perspective how PACE from a capital stack layer was beneficial. And we who've bullied others. SPEAKER 5: You can be your true self at work. Our report mentioned the local development corporations, the example being Energize New York, and the benefit of them being able to complete smaller projects, whereas some of the other PACE financing did have some pretty substantial minimum project requirements. We encourage open Commercial PACE. I see we've already got a number of questions rolling in here, so go ahead and type those right into the chat box. Thanks very much for commenting.

So maybe theres more that brings us together than we think.

So if a bank already has exposure to a project and if additional financing is about to occur that will be senior to them, the idea of them being in that senior position to themselves is obviously very attractive compared to anybody else. Today we're continuing our series within a series, focusing on underserved market segments.

Again, we've found HUD to be a very willing partner. In addition to the states, they do have strong presences in certain cities, but they really focus their advocacy efforts understanding that energy is very much a state-by-state game, that the rules are different in every state, the regulations are different, and so _____ that advocacy often needs to be different. Peter, are you on mute? So that is one thing, is connect with and there is, just like everything else there is an association of state Housing Finance Agencies at the national level in Washington. So in all of our work in energy efficiency we see many, many barriers to anyone taking action. Were there requirements on that? That's it for me and for my slides. Peter Adamczyk: Sure, yeah. And this last point is quite important, is important to understand, and that is that it is a standard clause in all non-residential mortgages that any existing lienholder must agree to any additional financing, whether and this is the key point whether it is junior or senior to the existing financing. All the best, Elizabeth Chant and Peter Adamczyk coauthored a foundational research paper released in 2018 that looked at precisely these questions and they'll lead off our discussion today. We who are madly in love. I'll disclose I'm a non-attorney, but since I've been in the PACE game, so to speak since 2013 roughly I have definitely been involved and have seen the evolvement of PACE and certainly happy to be here. It's a very powerful tool that can inform your decision making as it relates to Commercial PACE and serving those who live in multifamily housing in your jurisdiction. Having somebody on the inside who believes in it and thinks it's something that should be considered is you almost can't succeed without that, in my view. Then there is also assisted housing, which is either certificate, where often we I'm sorry. SPEAKER 2: Our mission statement, our goal is to go protect digital way of life for our customers. Next slide. Beautiful lesson. We very much appreciate it. Cheers, Energy Efficiency for All oh, Sean did such a good introduction job we're just gonna blow past these 'cause he already took care of all that.

And I would just kind of add one of the things I've kind of taken away is that, yeah, maybe there is more of a small kind of working group that approaches these entities, rather than just kind one individual or one entity at a time to help move this along. And so program C-PACE programs have loans that partnering with some organizations some capability to provide that technical support is really important. And so Ive been able to wrap up very quickly here. But this question is more targeted at the technology.

Chris will present this case study and other experience to take away from Ohio on his remarks today. So in that scenario you would still have 20 percent equity remaining after the 30 percent PACE loan was applied. Hi Teresa, And _____ _____ we learned that HUD had and I'll reference in a few slides for with the best of intentions, I believe, had placed some requirements on being able to use PACE financing in a HUD project that proved to be quite logistically quite large obstacles, the first one being that they not surprisingly required that there be enabling legislation that permitted this transaction. What we want to accomplish today in particular is to better understand the challenges and opportunities associated with financing efficiency upgrades in affordable and market rate family housing, as well as to understand some trends, successful models, and case studies for using C-PACE in the multifamily housing market segment, including existing properties and new construction. And if you don't have somebody that is central to the development of the project who wants it to happen, boy, is it a tough slog. Now is a great time for folks to type in questions if they've got them for Chris, Elizabeth, or Peter. Elizabeth currently serves on the boards of directors of the National Housing Trust and Three3. So for me that would be, like, the prime connection to make. Im going to edit it slightly as using it with young teens so the mention of having sex will produce nothing but hilarity and disruption. So with that, I will turn it over to Elizabeth to kick things off. That's the traditional and very thorny issue of split incentive. Others that face multifamily affordable housing efficiency improvements are almost always discretionary, and in affordable housing the resource constraints are so severe that most of the time the discretionary items get pushed to the back of the line. Sean Williamson: Other suggestions from Peter or Chris, or any other . But I'm always happy to field any questions at any time, either via the phone or e-mail. So the first one there we told you about closed back in 2017. And they're all basically looking at who are the developers and multifamily unit owners and decision makers who need to know about Commercial PACE, who they can reach out to and kind of share insights that they've learned from today's webinar with? We'd like to start by saying that there are many, many barriers that have nothing to do with renting, with multifamily, and with affordable housing. Kieran. PACE is a tax assessment, not a loan. So with the recognition that it's been a couple years since that report was released and things have evolved and changed, including some new projects and first of a kind type project in multifamily for new construction, I'm happy to introduce Chris Jones to kick off his remarks and share some more about some novel projects in Ohio. So what are some of the barriers in multifamily affordable housing? I know for a fact that it the first actually new construction in the state of Kentucky, but it just happened to be in the multifamily sector as well. And I would just add kind of as a side note that I think on these new construction developments, as it really even more pertains to some of the affordable multifamily, is that just from a building efficiency standpoint, certainly if we can make the building envelopes more energy efficiency, you know, that's certainly from a long-term standpoint because you obviously only get one chance to build that building envelope. In their role of looking out for the existing financial institutions and their involvement in financing, they required that any existing mortgagees have sufficient notice and time to in the event that there was a problem that they could step in. Today's agenda: I'm gonna start with a bit of brief background and level setting. Chris Jones: Yeah, so I would kind of target on one of the best practices that Peter had with regards to the Public Housing Authority opportunities. And the group is there on the right there, Energy Foundation, National Housing Trust, NRDC, and Elevate Energy.

We were quite surprised I was certainly that a government entity was so enthused about something that hadn't been done before. I'm trying to think of any other highlights to this one, other than I can just say it did take a little longer, which I think probably for the most part multifamilies do take a little longer, especially I think when you get into the affordable kind of housing. I'm aware of some states that define it as five or more. Again, we encourage HFA involvement, and the last point is to document and codify the successes and the communications you have. And we are constantly driving innovation within the company as well. Palo Alto Networks 2022 - All rights reserved. Next slide, please. We've got three expert presenters on today's call, each talking approximately 20 minutes, and I will introduce them independently shortly. The Section 8 program is the sort of normal nomenclature for the certificate-based assisted housing, and then there's also project-based where it's not money going to a resident but money going into a project. But when you've exhausted that possibility don't write off PACE just because the rate is higher. And so it ended up being an actually pretty complex deal just from the straight transaction. HUD says that something is affordable if a family that is making 60 percent of area median income can afford it with 30 percent of their income. There are other cycles with other types of properties.