Energy Efficiency Finance Solutions • The MUSH Market • Municipal University School & Hospital • A short intro… • Bundled Solutions • MUSH • Commercial • Market Diversity • Solutions & Customers June 2, 2015 David J. Clamage SAULSBURY HILL FINANCIAL This material is confidential and proprietary to Saulsbury Hill Financial, LLC.
Energy Efficiency Finance Solutions Asset Classes The finance community in and around the BUILDING ENERGY equation embraces the full library of ECMs and FIMs and not just in Performance Contracting EMS and BAS Controls Mechanical Chillers, Boilers and their infrastructure Building Envelope Lighting …and more!
Government Finance: Colorado Specific TELP • Tax Exempt Lease Purchase • Low Interest Rates • Nominally Unsecured • Colorado Approved This material is confidential and proprietary to Saulsbury Hill Financial, LLC.
Government Finance: Colorado Specific Know the laws of the land!
Government Finance: Colorado Specific Important Concepts •Non-appropriation If the monies allocated to a project, debt, lease, etc. are no longer available due to a budget contraction, non-appropriation – termination - is their right!
Government Finance: Colorado Specific Key Benefits •Low Tax-Exempt Interest Rates •No voter requirement •Special accounting treatment •Cash flow matching •Prepayable •$1 Purchase Option •Administratively efficient
Conduit Finance for Non-Profits “ They might be non-profit but, they’re not tax-exempt” • Tax Exempt • The concept of tax-exemption for the interest income a lender/lessor receives from a financing is reserved for state and local governments • The Conduit is the Alternative for a 501(c)(3) • A non-recourse lease or loan to a government or authority • A sub-lease or loan to the non-profit • Two Sets of Documents • Three Sets of Attorneys • Two Public Hearings • 2% Fee Cap
Conduit Finance for Non-Profits Non-recourse tax-exempt lease, Conduit Lease: Flow Chart note or bond Vendors & Suppliers Lessor Government Lessee Sale of Equipment Sub-lease, note or bond with matching 1 terms 501(c)(3) Lessee 1: Sub-financing is the “full faith and credit” of the non-profit.
Commercial Real Estate Primary Challenges • SPE Structure • Capital Stack • Commingling • Retained Earnings • Mortgagee Waiver • RAROC as Unsecured • Securitized Pools, i.e. CMBS • Split Incentive • “NNN” vs. BOMA “Green” Lease This material is confidential and proprietary to Saulsbury Hill Financial, LLC.
Commercial Real Estate Solutions • PACE • Single Tenant/User Property • Credit Enhancement • Mortgage • Owner Capital This material is confidential and proprietary to Saulsbury Hill Financial, LLC.
What is PACE? This material is confidential and proprietary to Saulsbury Hill Financial, LLC.
Commercial Real Estate Smaller Projects For owner occupied properties or single tenant, there are solutions tailored to the project under $100,000 Terms as long as 7 years All tax benefits for the property owner or tenant $1 End of Term Purchase Option Rebates and other local incentives can be applied to the project No requirement for a mortgagee waiver Our criteria is simple: Time in business > 5 years o Good bank, credit and trade references o Stable business, industry and local economy o
Commercial Real Estate Larger Projects For commercial and industrial property owners – as well as properties in many other classes, there are highly refined solutions driven by the project at hand and the good credit of the property. Terms to 10 years All tax benefits for the property owner or tenant $1 End of Term Purchase Option Rebates and other local incentives can be applied to the project No requirement for a mortgagee waiver Our criteria is simple: A solid credit is the owner and/or occupant of the o property. This includes cash flow and balance sheet analysis Bank, credit and trade references The kind of financing or lease of the facility.
The Private Market – Colleges & Education 501(c)(3) and For Profit In the Non-Profit Market solutions are: Conduit Financing - > $2 Million and why Commercial Financing - All sizes This is an important market and examples in Denver could include the University of Denver, Denver Country Day or Graland Academy and many more. The key – as with all lending – is credit and customer: Are they credit worthy – for the non-profits our online tools cover about 90% of the market What type of entity are they 501(c)(3) vs. For Profit
HOAs and Condominiums •This is a big market! …like ke huge! e!
HOAs and Condominiums Some basics A. 50 Units or more B. “B” or better buildings in “B” or better neighborhoods C. 5 Years of history D. Professionally Managed E. Owner occupied v. Rentals • Except Resorts
HOAs and Condominiums • Some things not so basic A. Terms to 15 Years! B. Most everything can be financed • All equipment • Installation • Engineering C. Great rates today • 5% to 7% • $100,000 can be as low as $871 per month
Energy Improvement Districts
Some IMPORTANT Resources http://www.dsireusa.org/
Some IMPORTANT Resources http://www.naseo.org/
Business and Economic Thoughts Interest Rates • The common notions of inflation and Keynesian Economics isn’t applying Crystal Ball • Beware of and prepare for the Black Swans The Oil Patch • In 2014 we had ~ 75 rigs in operation in Colorado…today we have 39 Is BASEL in Switzerland or In Your Business?
Off Balance Sheet Is this a unicorn or reality? • FASB Rules • Service Agreements • Shared Savings • PACE • EITF 01-08 …and other jargon and acronyms!
It’s all about COMMUNICATION!
Questions? • Off Balance Sheet • PPAs • Shared Savings • 501(c)(3)’s • Operating Leases • Interest Rates • Credit • The weather
Thank you! David J. Clamage 303-880-4033 x102 Davidc@saulhill.com
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