2022-164-Resolution No. 2022-023 Recorded 4/27/2022REVIEWED
a VAI.
LEGAL COUNSEL
Recorded in Deschutes County
Steve Dennison, County Clerk
Commissioners' Journal
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� 2022-164
CJ2022-164
04/27/2022 4:52:55 PM
BEFORE THE BOARD OF COUNTY COMMISSIONERS OF DESCHUTES COUNTY, OREGON
A Resolution Establishing a Commercial Property
Assessed Clean Energy ("CPACE") Program in * RESOLUTION NO. 2022-023
Deschutes County
WHEREAS, ORS 223.680 and ORS 223.685 authorizes the County to establish a program to assist
owners of commercial property with securing the financing of cost-effective energy improvements and seismic
rehabilitation improvements, respectively; and
WHEREAS, the programs authorized by ORS 223.680 and 223.685 are called Commercial Property
Assessed Clean Energy Programs, The CPACE Program supports the financing of energy and water efficiency
and renewable energy upgrades and seismic rehabilitation improvements on commercial buildings using a
property tax lien; and
WHEREAS, reducing energy and water consumption and improving seismic resiliency through building
retrofits will strengthen the County's economic infrastructure by improving property values, building
performance, and marketability of the County's commercial real estate. According to the 2011 study by
ECONorthwest (attached as Exhibit 1), every $1 million in project spending results in 15 new jobs and $2.5M in
economic output; and
WHEREAS, in accordance with best practices nationwide, a CPACE program can be successfully
implemented in Deschutes County that minimizes any local administrative burden and cost while ensuring that
Deschutes County is protected financially and legally from the authorization of a CPACE program; and
WHEREAS, attached as Exhibit 2 is the Program Guide which along with sample program documents
shall be part of the CPACE program in Deschutes County, which may be amended from time to time at the
discretion of the County Administrator for Deschutes County; and
WHEREAS, the Program Documents shall allow Property Owners to apply for approval of CPACE
benefit assessments on their property to repay financing from third party private capital providers, said benefit
assessments to be recorded on title to their property upon approval and closing of financing, with appropriate
protections for the County; and
WHEREAS, before establishing a program under this section, Deschutes County has provided notice to
utilities that distribute electric energy, natural gas or water within the areas in which the local government will
operate the program that a CPACE program will be established in accordance with ORS 223.680(3); and
PAGE I OF 2 — RESOLUTION NO.2022-023
WHEREAS, Deschutes County held a duly noticed public hearing on April 20, 2022, in order to receive
input and comment; now therefore,
BE IT RESOLVED BY THE BOARD OF COUNTY COMMISSIONERS OF DESC14UTES
COUNTY, OREGON AS FOLLOWS:
Section 1. The CPACE Program in Deschutes County is hereby established.
Section 2. The County Administrator for Deschutes County shall oversee development of the CPACE
program in accordance with ORS 223.680 and 223.685 and the Program Guide, plus sample program documents
and a fee schedule necessary to implement the CPACE program. This oversight shall extend to delegated and
outsourced services and management.
Section 3. The County Administrator will consult the County Clerk, County Assessor and County Tax
Collector as it oversees development and adaptation of the CPACE program.
Section 4. This Resolution shall take effect immediately from and after its adoption.
BOARD OF COUNTY COMMISSIONERS
OF DESCHUTES COUNTY, OREGON
Dated this 0 of , 2022
CDA
PA TI ADAIR, Chair
ATTEST:
Recording Secretary
ar 4?01�
ANTHONY DeBONE, Vice Chair
PHIL CHANG, Commissioner
PAGE 2 of 2 — RESOLUTION NO.2022-023
EXHIBIT 1(to Resolution 2022-023)
-conomic
Impact
Analysis
Property Assessed Clean
Energy Programs (PACE)
Research Performed by ECONorthwest for PACENow,
April 2011
This report summarizes an analysis by ECONorthwest of the economic impacts of Property
Assessed Clean Energy (PACE) programs. The analysis measures the output, employment
and tax impacts of purchase activity with the same composition of the project activity of the
PACE energy efficiency and renewable energy projects. The analysis is performed using the
IMPLAN input-output model system and simulated the implementation of PACE projects in
four cities, with computation of both local and national impacts. Significant, positive
economic and fiscal impacts are potentially associated with PACE energy efficiency and
renewable energy projects.
Economic fixipact Analysis of f'rc>pe ty Assessed Clean Fnei-gy t'ror rams (PAC'.,')
c:xe cutive Summary
ECONorthwest was engaged by the PACENow coalition to assist See ri anon a A for more
them in describing the economic effects of the Property Assessed authoTataorT about the
Clean Energy (PACE) programs. Specifically, this report presents authors.
CalCu1 10n5 UI the direct, indirect, aiiU iiiUiiced iiiipa%tS of
purchases associated with hypothetical PACE program
ECONorthwest
implementations on various measures of economic activity,
KOIN Tower
including direct, indirect and induced impacts on output and 222
employment, and the associated impacts on local, state and federal Site 1 Columbia St.
Su1600
tax revenues.
Portland, OR 97204
Findings
The analysis suggests that such programs have the potential of
generating significant economic and fiscal impacts. Specifically, $4 Phone 503-222-6060
million in total PACE project spending, across the four cities Fax 503-222-1504
included in this analysis ($1 million in spending in each city) will
on average generate:
• $10 million in gross economic output;
• $1 million in combined Federal, State and Local tax revenue;
• 60 jobs.
As a result, the PACE program projects have the potential to
provide stabilizing economic influences that should redound to the
Economic (rrip7 ic1 Aj-ialysis of I'mpetty Assessed Cle�iti Fir)et" y 1'rc>,n-ar71s (1'AC F,,')
benefit of involved communities, the regional and national economies and, thereby, to the value of
housing collateral of associated mortgages. The channels by which this occurs are through the largely
domestic supply -chain linkages of the purchases associated with the project developments themselves,
and the net reduction in housing user costs that flows from implementation of cost -beneficial energy -
efficiency improvements. We also offer an opinion regarding the likely effect of the senior property tax
lien that is associated with the structure of the PACE program. We conclude that, under most likely
conditions, the reduction in the cost and volatility of a building's purchased energy requirements
should add strength and resilience to home values in a manner that counterbalances the lenders'
concern about the lien impairing their mortgage loan collateral.
Study Approach
The analysis performed by ECONorthwest uses hypothetical purchase activity with the same,
approximate composition as PACE projects in terms of the economic sectors involved and does not
evaluate particular PACE projects. The impacts of project purchases associated with PACE activity are
traced to the linkages between PACE purchases and the chain of vendor relationships. Because PACE
projects also have the potential to affect household spending, through reductions in energy costs, the
impacts of that effect of the PACE projects were also examined.
The measurement of these relationships is performed within an input-output model framework using
IMPLAN model and data. The purchase activity is modeled in four, separate cities with local impacts
measured at the county or multi -county level. impact measures are extended to the nation as a whole,
thereby producing local, elsewhere -in -the -US, and total US impact measures for the modeled activities.
The remainder of this report presents the analysis that yielded these findings. First, a brief summary of
the PACE program is presented to set the context of the analysis. Then, we report the results of tracing
the direct, indirect and induced effects of the spending associated with types of energy -efficiency
improvements proposed by the PACE program. We also investigate the economic impacts of any
enlargement of household spending potential that arises from the reduced need to purchase energy at
market prices. Measurement of the economic implications includes an accounting of the tax -revenue
effects of each of the two spending impact channels.
In a final section of the report, the measured economic impacts are discussed in the context of the
concerns expressed by bank regulators and secondary mortgage market agencies.
Background- 'The PACE Progrom
Since 2008, twenty-four (24) states and the District of Columbia have passed laws enabling local
government jurisdictions to establish special assessment districts (also called special improvement
districts) that allow residential and commercial property owners to finance renewable energy (RE) and
1'.,c:t iotrdc.Irnpact Analysis of Property Assessed Clean Eti rgy Prog� rarrrs (I'/ 0_')
0 0 0
energy efficiency (EE) improvements on their properties. The National Renewable Energy Laboratory
describes the PACE program in this way:
The pivotal innovation of PACE is the creation of EE/RE assessments that are tied directly to the
house and repaid via the property owner's tax bill. The assessment, which is secured by a senior lien
on the property, does not require an up front payment. The lien provides strong debt collateral in
the event the homeowner — or business owner — defaults on the assessment. Because the assessment
and lien are tied directly to the property, they can be transferred upon sale.'
By the first half of 2010, PACE programs had been launched in a handful of communities and early
results were promising. The program appears to be effective in overcoming traditional barriers to
significant investment in energy efficiency and renewable energy and the associated spending have
been linked to construction activity in communities with PACE programs. Sonoma County, California,
for example, reportedly experienced more than $20 million in program spending activity by April 2010
and had seen its local construction industry employment rate improve dramatically in comparison to
neighboring counties.2
In early May 2010, Fannie Mae and Freddie Mac issued short letters suggesting that the PACE program
violated standard mortgage provisions.3 In addition, on July 6, 2010 the Federal Housing Finance
Agency (FHFA) and the Office of the Comptroller of the Currency (OCC) issued statements concluding
that PACE t)roLyrams "present significant safetv and soundness concerns to the housing finance
industry.114
As reported by the Lawrence Berkeley National Laboratory's Clean Energy Financing Policy Brief in
August 2010, that said, "Typically, the tax liens created by assessments are senior to other obligations,
like mortgages, and must be paid first in the event of foreclosure. Fannie Mae, Freddie Mac, the FHFA
and other financial regulators reasoned that PACE assessments were, in effect, loans not assessments
and so violated standard mortgage provisions requiring priority over any other loan."5
These and related developments have halted most PACE programs, according to Mr. David
Gabrielson, Executive Director of PACENow.
1 Property -Assessed Clean Energy Financing of Renewables and Efficiency. NREL/BR-6A2-47097. July 2010.
2 Written testimony of Sonoma County Auditor -Controller -Treasurer -Tax Collector Rod Dole before the House
Ways and Means Committee, April 14, 2010
3 Lawrence Berkeley National Laboratory, "Clean Energy Financing Policy Brief", August 11, 2010.
http://eetd.lbl.gov/ea/emp/ee-pubs.html
4 http://www.fhfa.gov/webfiles/15884/PACESTMT7610.pdf
5 Lawrence Berkeley National Laboratory, "Clean Energy Financing Policy Brief", August 11, 2010.
http://eetd.lbl.gov/ea/emp/ee-pubs.html
lbe PAC:F Pro ,r°am ��
li,c gnomic lrnpact Analysis of Property Assessed Clean 1?zaer y Prograrras (PAC F)
The Role of this Analysis
PACE proponents are assembling information in an effort to respond to these interpretations of
mortgage policy. This includes elucidating the economic and tax impacts of PACE projects as well as
the projects' effects on household budgets and housing values. To the extent that PACE projects can be
demonstrated to have the potential to enhance economic activity and associated tax collections, they
have the potential to strengthen local, state and national economic and fiscal conditions. In so doing,
PACE projects can improve the weakened housing and construction markets.
An additional issue, although not the direct focus of the quantitative research presented here, relates
even more directly to the concerns of regulators and agencies regarding the PACE program and
mortgage risk. To the extent the EE and RE projects reduce and/or stabilize households' energy
budgets, the programs have the potential to be risk reducing, rather than risk enhancing, for mortgage
lenders.
Both of these issues are discussed herein. We turn first to measuring the Program's potential economic
impacts. There are two dimensions to this analysis. One is the impact of the spending that occurs as
the result of installing energy efficiency and renewable energy measures. The second is the impact on
the household of changes in the burden in utility bills and, thus, on the effective cash resources of the
household to support other household spending.
Measuring the PACE 'r c rc m is Project Spending impact
PACE program projects generally involve spending on a variety of energy efficiency and renewable
energy improvements to existing housing. The decision to employ the PACE program is made by
consumers or developer/builders whose motives are reflective of consumer perspectives of the value of
the projects. In this respect, PACE project implementations are no different from other home -
improvement investment decisions that are made routinely in the economy, either by owner -occupants
or property renovators.6
The accepted method of measuring the impact of a purchase such as the PACE or traditional home -
improvement projects is to trace the impact of the initial ("direct") purchase decision on the activity of
vendors of goods and services affected by the purchase. Input-output models are used to trace these
6 The only significant distinction is that the PACE projects are financed through a though a special finance
mechanism. Specifically, through arrangements approved by participating tax authorities, the financing is
effected by dedication of a property tax increment to support repatriation of the costs of the PACE improvements.
A lien is placed on the property to provide security to the financing entity, and to permit the lien to follow the
property when it is sold. Although much is made of this distinctive feature of the program, in fact so-called
mechanics' liens are commonly placed against property to ensure that unpaid home -improvement contractors, in
the worst case, will have a claim against the value of the property.
I [w 1�ole of this ism lysi,, . 4
Econoitiic I111p�Ict l ni flVsis of Property Asseswd Clean EneG'€ Y t'ror,r�.inis (PAC F)
impacts. Distinctions are made among direct, indirect and induced impacts. (See Appendix B for a brief
summary of the input-output model tool that was used to develop the economic impact findings.)
Direct impacts
The renovation of buildings involves the purchase of capital equipment and labor to install such things
as photovoltaic systems and insulation products. The expenditure of funds on these activities is
associated with increased output by the directly involved enterprises. Each enterprise can be seen as a
firm who's production function consists of purchases of labor services from its own employees, and
purchases of output of other firms that produce the constituent materials that are used in the provision
of the energy production and energy efficiency systems installed at the individual sites.
These activities are said to have direct impacts in the form of employment of the associated labor, and
addition of value to the inputs purchased from other enterprises. The economic output of the
installation activity and the jobs directly associated with that activity are two key measures of the direct
impacts. Economists focus on the economic output measure because it is closest to the incremental
contribution to total, gross economic output made by the installation activity. Policy makers concerned
with job creation often focus more on the labor activity associated with the activity.
Other dimensions of direct impacts include the taxes as a course of providing the installation activity.
The tax impacts take the form of local, state and federal tax payments associated with the incomes of
those who own or work at the enterprise that performs the project as well as any payroll taxes,
property taxes, sales taxes and other payments to taxing entities to which the provider of the PACE
improvements is subject. Local governments and agencies are often interested in this dimension of the
direct impacts of the installation activity.
Indirect impacts
The direct purchase activity has indirect effects on the economy, in addition to the direct effects. These
occur because the direct purchases result, in turn, in the purchase of goods and services from other
businesses, since virtually no firms provide themselves with every needed input. These indirect,
("supply -chain") impacts take the same, general form as the direct impacts. That is, indirect purchases
result in impacts on labor services, create value-added, contribute tax payments, etc. in the course of
each vendor providing its products and services to the installation sector. The input-output modeling
of the various sectors that constitute the economy are used to trace the indirect effects through all of the
myriad links in the supply chain. Each vendor to the direct installation activity has vendors, who, in
turn, have vendors, etc. The matrix mathematics of input-output models permits aggregating the
impacts on what is, in theory, an infinite chain of vendor relationships.
Induced impacts
The third, and final mechanism by which the initial, direct purchase activity has impacts is through the
consumption expenditures of those who enjoy incomes from the direct or indirect activities that occur.
PZ11the 1'At. F h-(n11rM'W - 1}1-' ,l'f `'">pendirp> Eirp�i�_(��S � 5
E.conoi-tic I€ pi ict S ri al�7si ;cif Property Assessed Clel-in 1l'11(11.0 )7 1'r« r al�� (PAC - )
That is, some of their income is spent purchasing goods and services that also result in a cascade of
supply chain effects. These so-called induced impacts together with the indirect and direct impacts are
additive and constitute the total impact of the installation activity. The ratio of the total impacts to the
direct impacts on each of the dimensions of impact is often reported as the multiplier effect of the direct
activity. Thus, multipliers can be measured for jobs, value-added, tax receipts, or any other dimension
of the accumulated impacts.
The geography of impacts
The impact analysis implicitly has geographic dimensions. That is, the various vendors associated with
providing goods and services in response to the direct, indirect, and induced purchases can be located
in the immediate locality, other localities and states, or foreign countries. It is possible, with the latest
versions of input-output data, to assemble impacts at the various geographies. American policy
makers are generally interested in activity that accretes to labor, business and governments within the
boundaries of our nation. Purchases that occur in foreign countries are often considered "leakage" of
impacts to these locations.
From the broader view of the world economy, even foreign impacts may ultimately stimulate demand
for US goods and services through the international exchange of goods and services and international
flows of financial capital. Nonetheless, it is not unreasonable for policy makers to be interested
primarily in certain, specific geographies when measuring impacts. In the analysis reported herein, the
.. L L;« a.11 .�; .,, }, b,o 1^Gated in .^ne of four,�.t.es ::Tith the
direct purchases of Installation services are assume to e v
impacts appraised at both the local and the national level. This is done because regions host different
suppliers of goods and services, and have different labor market and tax systems. Thus, the
aggregation of impacts to the national level can vary with the locus of the initial purchase activity.
The Modeling Tool
The modeling of the impacts of purchases made under PACE program is performed using the
IMPLAN ("IMpact Analysis for PLANning ") model. IMPLAN was originally developed by the Forest
Service of the U.S. Department of Agriculture in cooperation with the Federal Emergency Management
Agency and the Bureau of Land Management of the U.S. Department of the Interior in 1993, and is
currently licensed and distributed by the Minnesota IMPLAN Group, Inc.
The IMPLAN model is an implementation of an input-output model —a way of representing an
economy that was developed by Wassily Leontief, for which he received the Nobel Memorial Prize in
Economic Sciences. An input-output model uses tabular (matrix) representations of an economy to
measure the effect of changes in one industry on others. It can be used to measure the effects of
purchases made by US consumers and governments, and foreign entities. Details on the constituent
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i:conomic Impact Analysis of Property Assessed ,sed Clean Energy 1'aoorams (11AC F)
matrices of input-output model systems and the associated mathematics can be found in many
sources..
The IMPLAN model is a highly respected implementation of Leontief's input-output concept, and is
generally agreed to be superior to regional impact multiplier systems.' IMPLAN is constructed with
data assembled for national income accounting purposes, thereby providing a tool that has a robust
link to widely accepted data development efforts. In addition, IMPLAN has been subject to detailed
scrutiny by experts on regional impact analysis. Most recently, the United States Department of
Agriculture (USDA) recognized the IMPLAN modeling framework as "one of the most credible
regional impact models used for regional economic impact analysis" and, following a review by
experts from seven US agencies, selected IMPLAN as its analysis framework for monitoring job
creation associated with the American Recovery and Reinvestment Act (ARRA) of 2009.910 More
information on the features of IMPLAN can be found at Appendix B or -wNv aw.inalalaii_<ona.
Application of the IMPLAN model in the case of the PACE program involves the following steps:
1. Development of a representation of PACE projects. This takes the form of a representation of the
labor and product purchases that constitute an energy efficiency or renewable energy project.
2. Selection of locales (cities) in which to hypothetically implement the projects. City data is assembled
from constituent county data.
3. For each selected city and project, building a model in IMPLAN that emulates the city by linking the
constituent �rnmties
4. Applying the assumed purchase activity to the affected IMPLAN sectors.
7 See, for example: Leontief, Wassily W. Input -Output Economics. 2nd ed., New York: Oxford University Press,
1986; Miller, Ronald E. and Peter D. Blair. Input -Output Analysis: Foundations and Extensions, 2nd edition,
Cambridge University Press, 2009: and Ten Raa, Thijs. The Economics of Input -Output Analysis. Cambridge
University Press, 2005.
8 One such system is RIMS III. See, US Department of Commerce, Bureau of Economic Analysis, Regional
multipliers: A user handbook for regional input-output modeling system (RIMS II). Third edition. Washington, D.C.:
U.S. Government Printing Office. 1997.
9 See excerpts from an April 9, 2009 letter to MIG, Inc., from John Kort, Acting Administrator of the USDA
Economic Research Service, on behalf of Secretary Vilsack, at www.implan.com.
10 In the economics profession, there is a lively debate as to whether job creation measured using input-output
tools such as IMPLAN under- or overstates the economic impacts of the spending activities modeled using the
IMPLAN system. Pessimists are tempted to assert that if spending occurs on Project A, then one should account
for the fact that Project B may not be pursued because of the diversion of funds to Project A. This view of the
economy as a zero -sum game is clearly incorrect in the aggregate, because we observe economic growth despite
constrained investment budgets. In this analysis we implicitly embrace this more realistic view because the
PACE program, though enabled by public policy, is implemented by the private sector which faces incentives to
only pursue cost -beneficial programs. This pursuit of economically efficient projects is consistent with the notion
that selecting productivity -enhancing (and thus, resource sparing) projects enlarges the potential of an economy,
in contrast to the implication of the zero -sum game perspective.
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5. Build a model in IMPLAN that links the purchase data and local models, one by one, to the national
model. Run the models to compute direct, indirect and induced impacts.
The manner of representing the PACE activities in IMPLAN is discussed further below.
Representing PACE Program Purchases in IMPLAN
In order to implement the IMPLAN model in the study of the PACE program, the purchases typically
made with PACE projects must be associated with the sectors that are representable within IMPLAN.
Recall that there are two, broad classes of PACE program projects:
1. The energy efficiency measures focus on reduction in the use of conventionally sourced energy
through the use of higher -efficiency devices and products. Such measures include permanent
improvements such as energy efficient HVAC systems; attic and wall insulation; duct and home
sealing; cool roof systems; solar water heater systems; tankless water heaters; and evaporative
coolers.
2. The renewable energy projects involve provision of energy to the household by means that are
described as "renewable" because of their reliance on sunlight, wind, ocean waves and other,
effectively non-depletable resources. Rooftop photovoltaic projects are expected to be the most
common form of project associated with the PACE programs.
As the project descriptions above suggest, a diverse family of products constitute the PACE program,
making it hazardous to assume a "typical" project. Installation of, say, a particular type of window
product, is also difficult to represent in IMPLAN because IMPLAN is able to represent the production
functions of a limited number of industrial products, and there is variation in production techniques ad
product features across producers of the same, general class product.
In addition, the costs of energy efficiency measures vary widely due to regional climate and the local
costs of labor and materials. Adding efficient central air conditioning to a home with existing forced air
heat, for example, costs approximately $3,500-$4,000 and takes about two days.11 Installing double -
paned windows can cost as much as $20,000 in a two-story home.12 According to GreenHomes
America, a leading residential energy services company which operates from coast to coast, an average
whole home retrofit project would cost the homeowner approximately $10,000.13 Average labor costs
represent 55% of the total and materials costs represent approximately 45%.14
Similarly, the costs of renewable energy projects of a given capacity in kilowatts (kW) is also variable
due to variations in the availability of the underlying natural resource (e.g., sunlight in the case of
photovoltaic devices), the cost of installation labor, variations in the characteristics of the property, etc.
11 http://www.fhfa.gov/webfiles/15884/PACESTMT7610.pdf
lz Lawrence Berkeley National Laboratory, "Clean Energy Financing Policy Brief", August 11, 2010.
http://eetd.lbl.gov/ea/emp/ee-pubs.html
13 Email correspondence of Mr. Cliff Staten with GreenHomes America Senior VP Michael Rogers, 2/18/11.
14 ibid
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I.?conanric lrlrl>act Arlalysis € f Pr oj--)erty Assessed Clean Fiier gy Pro rains (PAC t")
According to a December 2010 report by the Lawrence Berkeley National Laboratory, the national
average for a 4kW solar photovoltaic system is $30,000.15Materials account for 52%, while labor costs
associated with marketing, permitting and system installation accounts for approximately 48% of the
total.16
Because of the variations in the nature of energy efficiency and renewable energy projects, we
determined it is not appropriate to characterize a "typical" PACE project. In addition, energy efficiency
and renewable energy project activities are not represented at high resolution in the available input-
output model data. These models disaggregate the economy into approximately 440 sectors, and it is
necessary to represent project spending in terms of these sectors. Therefore, in the analysis that is
presented herein, the PACE projects are not specified in detail; rather, we model the impacts in the
following fashion:
1. An arbitrary amount of purchases ($1 million in 2011 dollar terms) is used to represent PACE
activity in a given locale. Since the inner workings of IMPLAN assume a constant production
function (specific to the year the model data represents), taking this approach allows one to scale the
impacts to an actual program simply by scaling actual spending to the $1 million placeholder value.
2. It is arbitrarily assumed that 50% of the assumed purchases is associated with photovoltaic
(renewable energy) installations, and 50% with energy efficiency projects.
3. Energy efficient project purchases were evenly allocated to the various weatherization and other
energy efficiency product sectors represented in IMPLAN. (See Exhibit 1 in Appendix C for the list
of IMPLAN and associated North American Industrial Classification System (NAICS) sectoral codes
that likely comprise the sectors affected by the energy efficiency and renewable energy project
purchases.)
4. No special edits of the IMPLAN model coefficients were made during the modeling. Specifically,
the regional purchase coefficients (RPCs) that represent the share of product purchases that are
made within the US was left at the average that IMPLAN derives from national income accounting
data. For example, solar photovoltaic systems in IMPLAN have an RPC of 75 percent (i.e., less than
would be the case with higher US content), because it is not possible to distinguish retail
photovoltaic products from other crystalline semiconductor products. This probably yields a
somewhat more conservative (low) total domestic impact because an active program like PACE
could make special efforts to source products with higher shares of US content.
Geographic Representation in IMPLAN
ECONorthwest and its client agreed that it would be useful to model the consequences of PACE
activity in a variety of locales. The selected, four communities are:
1. Columbus, OH (built from Delaware and Franklin Counties)
2. Long Island, NY (built from Nassau and Suffolk Counties)
3. Santa Barbara, CA (represented by Santa Barbara County)
4. San Antonio, TX (represented by Bexar County)
is "Tracking the Sun III," December 2010. http://eetd.lel.gov/ea/emp/re-pubs.html
16 "The Prospect for $1/Watt from Solar" U.S. DOE Workshop Presentation by John Lushetsky, August 10, 2010.
M(_'i;rlrin:7 tlli' PA F. PrC (,ranl's Project Sp4'i?ilin 1lnp"Icf.s'' �
C?c«r omic Impact Aiialysis of 1'r-operty Assessed C'.leaii Fiie ,v Proo-i,all-ls (TIAC'E)
The primary reason for modeling various locales is that vendor relationships vary geographically, with
some areas able to source from the immediate locale, while others tending to source from distant US
sources, or overseas suppliers. Budgetary considerations limited the number of locales able to be
modeled, because representation of each locale requires acquisition of individual databases, in addition
to linkages to the national model. However, the four chosen locales are diverse in geography and
climate conditions, and are locales of interest to the PACE program.
Findings of the Project Spending Impact Analysis
The findings of the economic impact analysis are presented in detail in Exhibit 2 through Exhibit 10 in
the Appendix C. These exhibits report the economic impacts of the hypothetical $1 million in project
purchases. In the exhibits, these impacts are reported along the following dimensions:
• The type of project. This is defined as a mix of energy efficiency measures or a photovoltaic
renewable energy installation;
• The dimension of the economic impact. The reported measures are economic output, personal
income, jobs and tax revenues;
• The type of impact. The direct, indirect, induced and total impacts are reported.
• The geography of the impact. Impacts are measured for each of the modeled cities, for the rest -of -
the -nation, and the nation as a whole. In the aggregation to the geographic level, a 50% weight is
put on energy efficiency and photovoltaic projects, respectively.
• The type of tax revenue generated. For compactness, the wide variety of tax types reported by
IMPLAN are grouped into four tax base levies -corporate profits and dividends taxes, indirect
business taxes, personal taxes, and social insurance levies.
• The level of government receiving the tax revenues. These are presented as state and local, and
federal subtotals, respectively.
It would be cumbersome to describe here each of the several hundred impact measures provided in the
exhibits. Instead, we first report here the range of impacts reported in the summary exhibits, Exhibit 2
and Exhibit 3 in Appendix C. These tables summarize the impacts by the type of project, the type of
impact, and the dimension of the economic impact for each of the cities, and for elsewhere -in -the -US
and the US as a whole."
Turning first to solar photovoltaic projects, we find the following impacts for spending $1 million in
each of the four cities:
The impact on total economic output ranges from approximately $718,000 to $872,000 at the
individual city level, and is $7.044 million for the rest of the US, and $10.250 million for the US as a
whole.
• The impact on personal income ranges from approximately $284,000 to $330,000 at the individual
city level, and is $2.066 million for the rest of the US, and $3.325 million for the US as a whole.
17 Elsewhere -in -the -US and national totals aggregate across the four analyzed cities.
Mc,&itrrttt� tl)(, f'A( l l'i-t)z r-�arri'�, l'ro)ecf 1111}<rc%<
10
Fcc>nomic lrripact Analysis of 1'rop(, ty Assessed Clean Ian 7`1;`' 1'rc>0 15(fIAC'F)
• The impact on jobs ranges from 6 to 8 additional jobs at the individual city level, and is 35 for the
rest of the US, and 60 for the US as a whole.
• Tax revenue impacts at the federal level range from $55,000 to $63,000 at the individual city level,
and is $426,000 for the rest of the US, and $669,000 for the US as a whole.
• Tax revenue impacts at the state and local level range from $34,000 to $41,000 at the individual city
level, and is $287,000 for the rest of the US, and $433,000 for the US as a whole.
• Total tax revenue impact at all levels of government is $1.102 million at the US level.
Figure 1. Total Tax Revenue (Fiscal) Impacts at the City Level, per $1, million in Project Spending per City.
$120,000
j
Columbus, OH
Long Island, NY
i
! i
Santa Barbara, CA
s $80,000-
-0
San Antonio, TX
$60,000
Total tax revenue
elsewhere -in -the -US
totals over
$40,000
$712,000, for a total
I
tax revenue impact j
of $1.102 million at
$20,000 --
i
the US level.
E �
i
For energy efficiency projects, we find the following impacts for each $1 million in purchases at the city
level:
• The impact on total economic output ranges from approximately $717,000 to $939,000 at the
individual city level, and is $7.570 million for the rest of the US, and $10.925 million for the US as a
whole.
• The impact on personal income ranges from approximately $283,000 to $352,000 at the individual
city level, and is $1.943 million for the rest of the US, and $3.232 million for the US as a whole.
• The impact on jobs ranges from 5 to 8 additional jobs at the individual city level, and is 35 for the
rest of the US, and 61 for the US as a whole.
• Tax revenue impacts at the federal level range from $60,000 to $66,000 at the individual city level,
and is $307,000 for the rest of the US, and $658,000 for the US as a whole.
• Tax revenue impacts at the state and local level range from $35,000 to $41,000 at the individual city
level, and is $259,000 for the rest of the US, and $411,000 for the US as a whole.
• Total tax revenue impact at all levels of government is $1.058 million at the US level.
Measurhi the MCA`, Program', , Pro'ec l Spending I (
Ecoruornic lliiyact Am lYsis of Property Assessed C leaii Ei)ergy Programs (PACLl')
0 0 0
As we have modeled the two project types in IMPLAN, there appears to be a somewhat greater local
impact associated with the energy efficiency versus the solar photovoltaic project types. This is
consistent with the fact that the specialized products and labor needed to produce photovoltaic
products are not likely to be as localized as are the products used in energy efficiency improvements.
When viewed from the jobs impact perspective, the $4 million of PACE -type project spending across
the four cities is associated with approximately 60 jobs somewhere in the nation. If one viewed the
PACE program as a jobs stimulus program (akin to those pursued at public expense under American
Recovery and Reinvestment Act of 2009), the cost per job at $67,000 is quite modest. In fact, of course,
in the PACE program the only significant role of government is to authorize a financing mechanism to
overcome what some believe to be non -economic impediments to credit access.
If viewed, alternatively, from a fiscal perspective, the $4 million of spending across the four cities
ultimately provides over $1 million in tax revenue to local, state or federal taxing entities. If the PACE
program is able to identify and stimulate cost -beneficial investments in energy enhancements of
housing, government stands to be a major beneficiary of the associated private spending.
In addition to the spending impacts associated with developing PACE -type projects, cost -beneficial
PACE projects18 should also reduce and/or stabilize the cost of energy to the households that occupy
the affected housing units. By definition, a cost -beneficial project is one that, over its lifetime, provides
the property owner more in the form of avoided energy costs than is spent enhancing the home.19
Access to alternative energy sources (through so-called renewable energy projects) can also provide, in
effect, insurance against the uncertainty about the path of future fossil fuel prices. This insurance effect
can be modeled as a financial option that has a positive financial value even if conventional fuel prices
are just variable, and do not necessarily trend upward.
Regardless of whether the project persistently lowers the market -energy needs of the household
(through energy efficiency projects) or simply provides insurance against uncertainty in market fuel
price movements, a cost -beneficial project reduces a household's effective budgetary burden of home
18 ECONorthwest was not asked to opine on whether typical PACE projects are, in fact, cost -beneficial. However,
since private agents are the ones primarily involved in the decision -making, it is reasonable to anticipate that the
projects that are successfully adopted are perceived as cost -beneficial by households or contractors developing
the projects for sale to consumer households.
19 The typical financial calculus involved in this determination involves, therefore, comparing the present value at
the time the enhancement spending occurs of the stream of expected energy cost savings enjoyed over the lifetime
of the energy enhancements. A discount rate is applied to the stream of energy cost savings in this calculation.
IV1( ,isl_iririg tl-ic [:`A -'L`ro ;itlrtl ; 1 IOU -A'l Old I41dl, £'t 111-11 ICt_> " 72.
Fcorlom c fmpact Aiialysis of Iroperty Assessed Clean Pi-oZ rams (PACI,')
ownership.20 Thus, to the extent that the project results in additional free cash flow in the household
(after paying the tax increment used to pay for the PACE improvements), there can be annual
increments of economic impact associated with the likely additional spending that the household will
perform.
This impact can also be measured using the IMPLAN modeling system by assuming a hypothetical
quantity of additional, non -utility spending by households. As with the PACE program spending
impacts, there are direct, indirect, and induced effects of this spending. In this case, however, the
amount measured by this method yields only the gross spending effects; the loss of spending to the
utility sector will result in a partial offset to these impacts.21
Exhibit 11, on page 31, summarizes the city -level and US total impacts, in present value terms, of a
household enjoying energy cost savings of $1,000 per year in 2011 dollars for 25 years. As the exhibit
reveals, the gross impacts of even a modest annual cost savings can yield large impacts on output,
personal income, jobs, and tax revenues over a 25-year period.
(_'-ondusions- The Implications of th't-E, Analysis for /ssuers of
Mortgages on PACE Project Properties
The background of the PACE program reveals that the program is currently not operational because of
concerns of bank regulators and secondary mortgage market entities regarding the security of their
access to the collateral value of the property in the event of default. The existence of a senior lien
(senior to the mortgage) is always of concern to mortgage issuers, especially in non -recourse states (i.e.,
states in which the lender may not levy claims against assets other than the mortgaged property
itself).12
Several aspects of the impact analysis presented here bear upon the position taken by those concerned
about such risks. First, to the extent that the PACE program operates in the manner assumed in the
analysis in this report, use of the program has the potential to have positive economic impacts on the
regional (city) economy, as well as the nation as a whole. Cost -beneficial programs that generate such
impacts can contribute to the process of recovery for both the economy in general, and the construction
services sector in particular.
20 Even in the special case where a renewable energy project only provides insurance against future volatility of
market fuel prices, the household enjoys budgetary relief. It need not set aside funds against the eventuality of a
surprise upward movement in energy costs.
21 Without knowing the composition of utility and non -utility spending of the affected income groups, the effects
of the shift in spending composition can only be estimated in rough terms.
22 There are 17 such non -recourse states.
C ol-Ickisions: `1I1e flliplic� tlons of tl,)(: fot- of Mori�� �1 ort PAC:' 1)roied 1'mperhes
l?coiaioirric (raapact Aiia]Ysis of Assessed Cleati Ei-i i,,,y 1't-ograa-ais (i'AC F:)
0 0 0
Second, to the extent that the projects generate the generous revenues for local, state and federal
jurisdictions modeled here, additional stabilization of the general economy can be expected. This is
because the difficulties that governments currently have in balancing their budgets is requiring either
reductions in public services or increases in taxes, or both. The risk of loss of public services, or
reductions in its quality, and the risks of increased taxation on private activity create an environment of
uncertainty, in general, and disrupt household location, migration and housing tenure decisions. On
some margin, these conditions weaken the strength of the housing market, aggravating lender
collateral problems. Cost -beneficial private sector activity that has the effect of enhancing the value of
housing services should not be discouraged by lenders, even from the perspective of their own self-
interest.
Third, in an environment of uncertain and costly supply of conventional fuels, properties that are
distinguished by having energy -sparing or inflation -defensive features will enjoy priority in
desirability, and hence, enjoy superior pricing in the marketplace. In a manner similar to the relative
price movements of gasoline -consumptive SUVs versus more fuel -efficient vehicles, properties with
good energy efficiency characteristics will rise in price in an uncertain commodity price environment.
Finally, although the existence of a lien in a superior position to a mortgage is legitimately worrisome
to lenders, the increment in value of the home that is represented by the energy technologies financed
by the lien may well move counter -cyclically to other factors affecting home prices and collateral value.
iI this is the case, then the putative adverse presence of the ue'lt may we'llbe counterbalanced by ulc
superior net resilience of PACE -improved home values. This seems true whether the economy fails to
come gracefully out of the recession because of central bank difficulties managing the balance between
inflation and real interest rates, or because of rising and/or uncertain energy costs:
If the monetary expansion results in higher, general inflation levels in the future, households for
whom the absolute energy cost of their budgets is below average will be less subject to inflation
effects on energy cost components of their budgets than households with larger absolute energy
budgets. Moreover, to the extent that the energy features of the home provide a hedge against some
portion of general inflation, the value of the home will rise by an amount reflective of the value of
that hedge.
If real interest rates rise instead, those homes with fixed lien payments associated with the PACE
program (and, ideally, a fixed-rate mortgage as well) enjoy, in effect, a reduction in the present value
of the lien payment obligations. Although higher mortgage rates will not be favorable to home sales
or home building, creditors with fixed-rate obligations enjoy an implicit capital gain (much as the
holders of low rate mortgages will suffer a capital loss). Abandoning a home with a fixed lien in a
rising real interest rate market makes no more sense than abandoning a low -rate mortgage in that
environment.
• If energy prices rise independently of other prices (commodity price inflation), the value of the
energy -sparing improvements will rise, even if and as the higher energy prices impair economic
recovery, incomes and housing demand. By recognizing the value of the energy -sparing features of
the home and accommodating borrowers who must take on property tax liens to enjoy these
f'caraclt1',ioY7s: H-1 fill r,iicM10 ias of fli€> Analysis fol, o V1rar-t";a"es o ra 1'A('F I'rojo(A 1'€of_)e tios � 11
Economic 1m1_)ad Analysis of Property Assessed Clean Energy Programs )
features, the lenders are, in effect, putting themselves in a better position than if they had lent the
same principal amount to a homeowner who had not acquired protection against energy price
movements.
In summary, it is hard to construct a scenario in which the presence of a lien that is associated with
value -enhancing and stabilizing housing services adds to the riskiness of a mortgage vs. a loan on a
home without the lien and energy features, everything else being equal.
These arguments would be less persuasive, of course, if one did not believe that (a) the housing market
recognizes the value of energy -sparing features of homes or that (b) the programs of PACENow and
like initiatives will deliver improvements that cost-effectively provide the homeowner with lower
energy cost burdens and/or a hedge against rising or uncertain energy prices. ECONorthwest cannot
opine on the logic of (b), but has experience in evaluating the relationship between the market prices of
homes and their energy features. In 1993, ECONorthwest published a study of an energy -efficient
mortgage program that was performed for the Oregon Department of Energy. Using a unique
database that contained information on various home insulation and heat source features of homes that
sold in Oregon, ECONorthwest established both that the market does recognize the present value of
energy cost savings in higher home prices and that the changes in Oregon's building code in 1992 (to
reduce energy use by housing) were cost-beneficial.23
23 See, Implementing Oregon's Energy Efficient Mortgage Program: Final Report, ECONorthwest, June 1993. In Part 3
of that report ("Market Response to Energy Saving Features") an econometric analysis was performed using a
special database provided by the Appraisers' Comp Service (ACS). At the time, the ACS maintained a database of
real estate sales in major markets so that appraisers may obtain comparable sales information for use in
appraisals. Uniquely, the database contained information on certain energy -related features of the homes sold
including ceiling insulation value, floor insulation value, wall insulation value, type of heating and whether the
home had been built to the 1992 code (in addition to many other features of the homes). The sales prices covered
a narrow period of September 4, 1992 to June 15, 1993, and comprised approximately 2,780 total observations in
two metropolitan areas of Oregon. The econometric analysis revealed that buyers assigned high values to
energy -sparing features. The value of those features was such that ECONorthwest concluded on page 48 that
"...the 1992 code enhancements are associated with significant enhancements in home value. All of the estimates
are far in excess of the estimated costs of the 1992 code described by builders in Part One of this report."
Conc• tisions: 'I I'r< of the Analysis for kst'ler_; of Morh,,,a e,� on PA 1'. Pro'ect )'m}74=,•hes 0 15
Fconoiiiic Irrr}7uct Analysis of I'rc>pei-ty Asses sect (Clean Ftiergy i wgt-�ij-ns (11A Cl?)
0 ® 0
/ A \pper)(Ifix A- About the Author's
Randall Pozdena, PhD, Senior Economist and Managing Director
Dr. Pozdena leads ECONorthwest's quantitative analysis practice. He joined ECONorthwest as a
managing director and head of its Portland office in 1991. He has extensive experience in macro-
economic modeling and forecasting, project feasibility analysis, banking and securities markets, real-
estate economics, and monetary policy. In this capacity, he has developed and applied project
evaluation and pricing tools, and state, regional and sectoral macroeconomic forecasting and economic
impact models. Prior to joining ECONorthwest, Pozdena was research Vice President of the Federal
Reserve Bank of San Francisco. He directed the Banking and Regional Studies section, which advised
on matters relating to financial -market developments, mortgage and housing markets, banking
operations and regulation, and the regional economies of the eight western United States. The latter
duties involved developing and operating models of states and metropolitan -area economies and
analysis of credit flows in the economy. Before his work at the Federal Reserve Bank, Pozdena was a
senior economist at SRI International, where he provided consulting on economics, finance, and
transportation economics. In addition, he has taught economics and finance at the Graduate School of
Business, University of California, Berkeley and at the Graduate School of Administration, University
of California, Irvine. He was also associated with the Institute of Transportation Studies at Irvine.
Pozdena has been a member of the CFA Institute for over 15 years and a member, and former board
member, of the Portland Society of Financial Analysts. He has written over 50 published books and
papers, has 21 listings in the Journal of Economic Literature, and over 5,000 search cross-references in
Google Research.
Alec Josephson, MA, Senior Economist and Director of Economic Impact Analysis
Josephson has been with ECONorthwest since 1992 and has participated in well over 300 economic
impact studies using the IMPLAN modeling systems. Josephson's experience spans a wide range of
industries, sectors, and programs, including major transportation improvement projects; heavy and
light manufacturing activities; renewable energy projects and technologies; agriculture, forestry,
mining, and commodities; and economic development projects. Josephson recently completed a
comprehensive economic analysis of the impacts from proposed changes to Seattle area transportation
resulting from restructuring of the Alaska Way Viaduct, including analysis of tolling and other
congestion models, impacts of freight traffic, analysis of the short-term construction impacts and the
long-term accessibility and business development impacts. In addition to his work with
ECONorthwest, Mr. Josephson is an adjunct professor of economics at Pacific University, where he
teaches courses in energy and environmental economics, microeconomics, and macroeconomics. Mr.
Josephson and his staff conducted the modeling presented in this report.
/4 �,I)e m3ix A: A[h.i it farc. Authors - 16
Ec000mic l -ipact Aiiz l\?sis of Property Assessed C'lc�)ji f`i,iergy Piro ,k°cims (PAO,")
0 0 0
Appendix B.- Yhe IMPLAN Modeling SysteM24
Social Accounting
IMPLAN's Social Accounting Matrices (SAMs) capture the actual dollar amounts of all business
transactions taking place in a regional economy as reported each year by businesses and governmental
agencies. SAM accounts are a better measure of economic flow than traditional input-output accounts
because they include "non -market" transactions. Examples of these transactions would be taxes and
unemployment benefits.
Multipliers
Social Accounting Matrices can be constructed to show the effects of a given change on the economy of
interest. These are called Multiplier Models. Multiplier Models study the impacts of a user -specified
change in the chosen economy for 440 different industries. Because the Multiplier Models are built
directly from the region specific Social Accounting Matrices, they will reflect the region's unique
structure and trade situation.
Multiplier Models are the framework for building impact analysis questions. Derived mathematically,
these models estimate the magnitude and distribution of economic impacts, and measure three types of
effects that are displayed in the final report. These are the direct, indirect, and induced changes within
the economy. Direct effects are determined by the Event as defined by the user (i.e. a $10 million dollar
order is a $10 million dollar direct effect). The indirect effects are determined by the amount of the
direct effect spent within the study region on supplies, services, labor and taxes. Finally the induced
effect measures the money that is re -spent in the study area as a result of spending from the indirect
effect. Each of these steps recognizes an important leakage from the economic study region spent on
purchases outside of the defined area. Eventually these leakages will stop the cycle.
Trade Flows Method
Unique to IMPLAN data, 2008 and forward, is a method of tracking regional purchases by estimating
trade flows. An updated and improved method for calculating and tracking the movement of
commodities between industries within a region, this method tracks over 500 commodities in each
study area, and allows more accurate capturing of indirect and induced effects. This new method of
capturing regional purchase coefficients also makes it possible for our Version 3 software to perform
Multiregional Analysis, so users can see how a change in their local region causes additional affects
surrounding areas.
Cost -Effective Modeling
Tremendous amounts of data are required in order to run Social Accounting Matrices and Multiplier
Models that will accurately estimate the effects of a given event on an economy. There are numerous
24 Abstracted from descriptive materials offered by IMPLAN at www.implan.com.
%0p[7 )er�di,x Ii: H)e lM P AN i\Xodeli ig `9y.GJein - 18
F,cmiorriic Ioipact AiiAysis of C'r•opeay Assessecl C'leciii Fi'ier-y Pmg)i-ar7i s (PACE)
factors that need to be taken into account to fully visualize direct, indirect and induced effects of an
event. The expense and labor of developing this data independently are prohibitive. By offering the
data in many discreet forms, IMPLAN also allows studies to be localized effectively and only data of
interest to be purchased.
1�: Clue IMPLAN lVlodolifw S�SWITI - .19
Fcom)iiiic Irripact Aiialysis of Prol.-wrty Assessed Cleai7 Ei'iergy Proo rai11s
25 The data in all exhibits is from ECONorthwest using IMPLAN modeling and emulation of PACE project
purchases as described in the text of the report.
E;cononiic In-yact AnalN�sis of Property Assessed Clean Eneroy Programs (PAC U)
Exhibit 1: INIPLAN and NAICS Sectors Associated with PACE Project Activity
IMPLAN
Sector
IMPLAN Description
2007 NAICS
Codes
40
Maintenance and repair construction of residential structures
23"
99
Wood windows and doors and millwork manufacturing
32191
128
Synthetic rubber manufacturing
325212
137
Adhesive manufacturing
32552
146
Polystyrene foam product manufacturing
32614
149
Other plastics product manufacturing
32619
168
Mineral wool manufacturing
327993
216
Air conditioning- refrigeration- and warm air heat
333415
243
Semiconductor and related device manufacturing
334413
Appendix C : Fxhibits I
Economic Impact Analysis of Property Assessed Clean Energy Pro -rams (11AC:F)
Exhibit 2: Summary of Economic Impacts of Photovoltaic Projects, per $1 million in Project Purchases
Economic Impacts - Solar Photovoltaics
Santa Barbara, CA
Output
$490,221
$116,918
$173,047
$780,185
Personal Income
$214,608
$45,318
$59,668
$319,593
Jobs
3
1
1
6
San Antonio, TX
Output
$507,649
$145,867
$218,552
$872,068
Personal Income
$198,656
$57,671
$73,611
$329,937
Jobs
5
1
2
8
Columbus, OH
Output
$501,674
$132,488
$201,844
$836,006
Personal Income
$202,121
$55,477
$68,120
$325,718
Jobs
4
1
2
7
Long Island, NY
Output
$438,330
$121,541
$157,729
$717,599
Personal Income
$177,780
$49,051
$57,453
$284,284
Jobs
3
1
1
5
Elsewhere in the United States
Output
$1,587,757
$2,597,183
$2,859,334
$7,044,273
Personal Income
$409,984
$778,674
$877,716
$2,066,374
Jobs
4
12
18
35
United States Total
Output
$3,525,630
$3,113,996
$3,610,504
$10,250,130
Personal Income
$1,203,148
$986,190
$1,136,566
$3,325,904
Jobs
20
16
24
60
Appendix Fxhil-')its
Econorttic Impact Analysis of' Property Assessed Clean Energy Programs (PACI3)
Exhibit 3: Summary of Fiscal Impacts for Solar Photovoltaics, Per $1. million in Project Purchases
Fiscal Impacts - Solar Photovoltaics
Impact Area /
Type of°Impact
Direct
Indirect
Induced
Total
Santa Barbara, CA
Federal
$33,390
$17,238
$12,393
$63,021
State and Local
$12,188
$8,920
$13,578
$34,685
Total All $45,578
$26,158
$25,971
$97,706
San Antonio, TX
Federal
$33,990
$13,135
$16,104
$63,228
State and Local
$6,964
$12,005
$14,725
$33,693
Total All $40,953
$25,139
$30,829
$96,921
Columbus, OH
Federal
$29,878
$10,819
$14,317
$55,013
State and Local
$10,491
$11,259
$15,467
$37,217
Total All $40,369
$22,078
$29,784
$92,230
Long Island, NY
Federal
$36,904
$11,239
$13,725
$61,867
State and Local
$15,494
$11,213
$14,451
$41,157
Total All
$52,398
$22,451
$28,176
$103,024
Elsewhere in the United States
Federal
$88,116
$149,923
$187,622
$425,660
State and Local
$37,306
$100,785
$148,646
$286,737
Total All
$125,422
$250,707
$336,268
$712,396
United States Total
Federal
$222,276
$202,352
$244,160
$668,788
State and Local
$82,442
$144,180
$206,866
$433,488
Total All
$304,718
$346,532
$451,026
$1,102,276
Economic 1111pact Analysis of Property Assessed Clean F.nerg y Pro( rranis' ( ACF..)
Exhibit 4: Summary of Economic Impacts of Energy Efficiency Programs, Per $1 million in Project Purchases
Economic Impacts - EE Measures
Santa Barbara, CA
Output
$513,252
$123,023
$174,721
$810,996
Personal Income
$215,490
$46,942
$60,245
$322,677
Jobs
3
1
1
6
San Antonio, TX
Output
$513,521
$145,532
$219,473
$878,525
Personal Income
$199,952
$57,372
$73,921
$331,244
Jobs
5
1
2
8
Columbus, OH
Output
$565,830
$155,640
$217,883
$939,353
Personal Income
$215,850
$62,958
$73,534
$352,342
Jobs
4
1
2
8
Long Island, NY
Output
$442,063
$113,635
$161,223
$716,921
Personal Income
$180,828
$44,978
$57,298
$283,104
Jobs
3
1
1
5
Elsewhere in the United States
Output
$1,772,714
$3,070,827
$2,735,981
$7,579,521
Personal Income
$367,042
$736,774
$839,779
$1,943,594
Jobs
6
11
17
35
United States Total
Output
$3,807,378
$3,608,656
$3,509,280
$10,925,314
Personal Income
$1,179,160
$949,024
$1,104,776
$3,232,960
Jobs
21
16
24
61
F"conoinic frnpact Analvsi-� ol- Property Assessed Clean Energy Programs (PACT)
Exhibit 5: Summary of Fiscal Impacts of Energy Efficiency Measures, per $1. million in Project Purchases
Fiscal Impacts - EE Measures
Santa Barbara, CA
Federal
$33,515
$17,551
$12,513
$63,578
State and Local
$12,119
$9,146
$13,709
$34,973
Total All $45,633
$26,697
$26,222
$98,551
San Antonio, TX
Federal
$36,421
$12,584
$16,715
$65,720
State and Local
$8,334
$11,458
$15,287
$35,079
Total All $44,755
$24,042
$32,002
$100,798
Columbus, OH
Federal
$32,427
$12,301
$15,454
$60,181
State and Local
$11,852
$12,613
$16,695
$41,159
Total All $44,279
$24,913
$32,149
$101,340
Long Island, NY
Federal
$37,245
$10,333
$13,688
$61,265
State and Local
$15,578
$10,439
$14,413
$40,429
Total All
$52,823
$20,771
$28,101
$101,694
Elsewhere in the United States
Federal
$72,768
$145,060
$178,967
$396,795
State and Local
$17,150
$101,554
$140,997
$259,701
Total All
$89,918
$246,614
$319,964
$656,495
United States Total
Federal
$212,374
$197,828
$237,336
$647,538
State and Local
$65,032
$145,208
$201,100
$411,340
Total All
$277,406
$343,036
$438,436
$1,058,878
Economic Impact Analysis of Property. A,s,scssed Clean Eaergy Programs (1'A(-',F)
Exhibit 6: Summary of Impacts, Columbus Ohio, per $1 million in Project Purchases
Solar Photovoltaics
Type of Impact
Direct
Indirect
Induced
Total
Output
$501,674
$132,488
$201,844
$836,006
Personal Income
$202,121
$55,477
$68,120
$325,718
Jobs
4.3
1.2
1.7
7.2
Type of Tax
Direct
Indirect
Induced
Total
Federal
Corporate Profits
$1,831
$829
$1,818
$4,478
Indirect Business
$534
$1,804
$2,378
$4,715
Personal
$9,924
$2,589
$3,164
$15,676
Social Insurance
$17,590
$5,597
$6,958
$30,144
Total Federal
$29,878
$10,819
$14,317
$55,013
State and Local
Corporate Profits and Dividends
$1,949
$883
$1,935
$4,766
Indirect Business
$2,589
$8,752
$11,539
$22,880
Personal
$5,391
$1,406
$1,719
$8,515
Social Insurance
$564
$219
$275
$1,057
Total State and Local
$10,491
$11,259
$15,467
$37,217
Total All
$40,369
$22,078
$29,784
$92,230
Energy Efficiency
Type of Impact
Direct
Indirect
Induced
Total
Output
$565,830
$155,640
$217,883
$939,353
Personal Income
$215,850
$62,958
$73,534
$352,342
Jobs
4.5
1.3
1.8
7.6
Type of Tax
Direct
Indirect
Induced
Total
Federal
Corporate Profits
$2,225
$1,004
$1,963
$5,192
Indirect Business
$645
$1,999
$2,566
$5,210
Personal
$10,560
$2,937
$3,415
$16,912
Social Insurance
$18,997
$6,361
$7,511
$32,868
Total Federal
$32,427
$12,301
$15,454
$60,181
State and Local
Corporate Profits and Dividends
$2,368
$1,069
$2,089
$5,525
Indirect Business
$3,129
$9,701
$12,455
$25,284
Personal
$5,736
$1,595
$1,855
$9,186
Social Insurance
$620
$249
$297
$1,165
Total State and Local
$11,852
$12,613
$16,695
$41,159
Total All
$44,279
$24,913
$32,149
$101,340
Appendix ( 11"Ahibits - 26
E3conondc Ini pact Analysis of Property Assessed Clean l.nei v Programs (PAC I. )
Exhibit 7: Summary of Impacts, Long Island, NY, per $1 million in Project Purchases
Solar Photovoltaics
Type of Impact
Direct
Indirect
Induced
Total
Output
$438,330
$121,541
$157,729
$717,599
Personal Income
$177,780
$49,051
$57,453
$284,284
Jobs
3.0
0.8
1.1
5.0
Type of Tax
Direct
Indirect
Induced
Total
Federal
Corporate Profits
$1,279
$556
$1,002
$2,836
Indirect Business
$360
$856
$1,086
$2,301
Personal
$16,486
$4,537
$5,298
$26,320
Social Insurance
$18,780
$5,291
$6,340
$30,411
Total Federal
$36,904
$11,239
$13,725
$61,867
State and Local
Corporate Profits and Dividends
$2,174
$945
$1,705
$4,823
Indirect Business
$3,135
$7,458
$9,455
$20,048
Personal
$9,489
$2,611
$3,050
$15,150
Social Insurance
$697
$199
$241
$1,137
Total State and Local
$15,494
$11,213
$14,451
$41,157
Total All
$52,398
$22,451
$28,176
$103,024
Energy Efficiency
Type of Impact
Direct
Indirect
Induced
Total
Output
$442,063
$113,635
$161,223
$716,921
Personal Income
$180,828
$44,978
$57,298
$283,104
Jobs
3.1
0.8
1.1
4.9
Type of Tax
Direct
Indirect
Induced
Total
Federal
Corporate Profits
$1,324
$530
$1,000
$2,854
Indirect Business
$341
$799
$1,083
$2,222
Personal
$16,805
$4,161
$5,283
$26,248
Social Insurance
$18,776
$4,844
$6,323
$29,942
Total Federal
$37,245
$10,333
$13,688
$61,265
State and Local
Corporate Profits and Dividends
$2,252
$902
$1,701
$4,854
Indirect Business
$2,965
$6,961
$9,430
$19,355
Personal
$9,672
$2,395
$3,042
$15,109
Social Insurance
$690
$182
$241
$1,112
Total State and Local
$15,578
$10,439
$14,413
$40,429
Total All
$52,823
$20,771
$28,101
$101,694
L,ctanomic Impact Analysis of Property Assessed Clean Ertergy Pro ran -Is (PAC U)
Exhibit 8: Summary of Impacts, San Antonio, Texas, per $1. million in Project Purchases
Solar Photovoltaics
Type of Impact Direct Indirect Induced Total
Output $507,649 $145,867 $218,552 $872,068
Personal Income $198,656 $57,671 $73,611 $329,937
Jobs 4.5 1.3 1.8 7.7
Type of Tax
Direct
Indirect
Induced
Total
Federal
Corporate Profits
$2,388
$1,075
$2,043
$5,506
Indirect Business
$610
$1,566
$1,891
$4,067
Personal
$11,903
$3,747
$4,305
$19,955
Social Insurance
$19,089
$6,747
$7,865
$33,701
Total Federal
$33,990
$13,135
$16,104
$63,228
State and Local
Corporate Profits and Dividends
$818
$368
$700
$1,886
Indirect Business
$4,300
$11,030
$13,323
$28,652
Personal
$1,564
$492
$566
$2,621
Social Insurance
$283
$115
$137
$534
Total State and Local
$6,964
$12,005
$14,725
$33,693
Total All
$40,953
$25,139
$30,829
$96,921
Energy Efficiency
Type of Impact
Direct
Indirect
Induced
Total
Output'
$5,134,521
$1AG, 55JJ32
L 11 -1 J
Q87�,G2�71OA71 G
Personal Income
$199,952
$57,372
$73,921
$331,244
Jobs
4.5
1.3
1.8
7.7
Type of Tax
Direct
Indirect
Induced
Total
Federal
Corporate Profits
$2,845
$1,058
$2,121
$6,023
Indirect Business
$767
$1,493
$1,963
$4,222
Personal
$12,659
$3,600
$4,469
$20,727
Social Insurance
$20,151
$6,434
$8,163
$34,748
Total Federal
$36,421
$12,584
$16,715
$65,720
State and Local
Corporate Profits and Dividends
$974
$362
$727
$2,063
Indirect Business
$5,403
$10,514
$13,832
$29,748
Personal
$1,663
$473
$587
$2,723
Social Insurance
$295
$109
$142
$546
Total State and Local
$8,334
$11,458
$15,287
$35,079
Total All
$44,755
$24,042
$32,002
$100,798
ill l cndix C: 1', 17il,tt:, 28
F coriornic impact Analysis of Proj_-wrty Assessed Clean lY.ner°� y Programs (PACU)
Exhibit 9: Summary of Impacts, Santa Barbara, California, per $1. million in Project Purchases
Solar Photovoltaics
Type of Impact Direct Indirect Induced Total
Output $490,221 $116,918 $173,047 $780,185
Personal Income $214,608 $45,318 $59,668 $319,593
Jobs 3.4 0.9 1.4 5.6
Type of Tax
Direct
Indirect
Induced
Total
Federal
Corporate Profits
$1,094
$150
$892
$2,135
Indirect Business
$412
$3,574
$1,431
$5,416
Personal
$13,958
$2,572
$3,779
$20,308
Social Insurance
$17,927
$10,944
$6,292
$35,162
Total Federal
$33,390
$17,238
$12,393
$63,021
State and Local
Corporate Profits and Dividends
$1,352
$507
$1,102
$2,961
Indirect Business
$2,945
$6,710
$10,233
$19,887
Personal
$7,218
$1,486
$1,955
$10,658
Social Insurance
$673
$218
$289
$1,180
Total State and Local
$12,188
$8,920
$13,578
$34,685
Total All
$45,578
$26,158
$25,971
$97,706
Energy Efficiency
Type of Impact
Direct
Indirect
Induced
Total
OUtr./ul
J $51.I31, V 2552
"3 0233
WIL ,V V
$174,1 721
$810 996
Personal Income
$215,490
$46,942
$60,245
$322,677
Jobs
3.4
0.9
1.4
5.7
Type of Tax
Direct
Indirect
Induced
Total
Federal
Corporate Profits
$1,083
$177
$900
$2,160
Indirect Business
$400
$3,592
$1,445
$5,436
Personal
$14,014
$2,675
$3,816
$20,504
Social Insurance
$18,019
$11,107
$6,353
$35,479
Total Federal
$33,515
$17,551
$12,513
$63,578
State and Local
Corporate Profits and Dividends
$1,338
$541
$1,113
$2,991
Indirect Business
$2,858
$6,841
$10,332
$20,030
Personal
$7,246
$1,539
$1,973
$10,758
Social Insurance
$678
$225
$292
$1,195
Total State and Local
$12,119
$9,146
$13,709
$34,973
Total All
$45,633
$26,697
$26,222
$98,551
Appendix C: F,xhihi( - 213
Flconornic Impact Analysis of Property Assessed Clean 11."ner gy Prop -rims (PACF)
Exhibit 10: Summary of Impacts, United States (aggregate), per $1 million in Project Purchases per City
Solar Photovoltaics
Type of Impact
Direct
Indirect
Induced
Total
Output
$3,525,630
$3,113,996
$3,610,504
$10,250,130
Personal Income
$1,203,148
$986,190
$1,136,566
$3,325,904
Jobs
19.6
16.0
24.4
60.0
Type of Tax
Direct
Indirect
Induced
Total
Federal
Corporate Profits
$20,048
$19,414
$27,984
$67,446
Indirect Business
$7,214
$17,650
$26,040
$50,904
Personal
$73,692
$59,976
$69,150
$202,818
Social Insurance
$121,322
$105,312
$120,986
$347,620
Total Federal
$222,276
$202,352
$244,160
$668,788
State and Local
Corporate Profits and Dividends
$17,330
$16,778
$24,188
$58,296
Indirect Business
$45,408
$111,096
$163,900
$320,404
Personal
$17,102
$13,922
$16,048
$47,072
Social Insurance
$2,602
$2,384
$2,730
$7,716
Total State and Local
$82,442
$144,180
$206,866
$433,488
Total All
$304,718
$346,532
$451,026
$1,102,276
Energy Efficiency
Type of Impact
Direct
Indirect
Induced
Total
n +
Vutp4l
$,,,801,17Q .,1 V
$3,FnuVVV,65a
o
5.,.,,28n .,
ZVVV ..,n
1° 5 1
O,v2 ,3 4
Personal Income
$1,179,160
$949,024
$1,104,776
$3,232,960
Jobs
21.4
15.8
23.6
60.8
Type of Tax
Direct
Indirect
Induced
Total
Federal
Corporate Profits
$17,460
$22,090
$27,204
$66,754
Indirect Business
$4,870
$17,546
$25,312
$47,728
Personal
$72,308
$57,784
$67,216
$197,308
Social Insurance
$117,736
$100,408
$117,604
$335,748
Total Federal
$212,374
$197,828
$237,336
$647,538
State and Local
Corporate Profits and Dividends
$15,094
$19,092
$23,514
$57,700
Indirect Business
$30,656
$110,454
$159,330
$300,440
Personal
$16,780
$13,410
$15,602
$45,792
Social Insurance
$2,502
$2,252
$2,654
$7,408
Total State and Local
$65,032
$145,208
$201,100
$411,340
Total All
$277,406
$343,036
$438,436
$1,058,878
ialrpenclix C : Exhibits - 30
Economic lm1_-)act Analysis of PropeTly Assessed Clemi Energy Programs (11ACF)
Exhibit 11: Economic Impacts of $1,000 in Annual Household Energy Costs for 25 Years (in Present Value)
Jobs (Full -
Personal
and Part-
Federal
State and
Impact Area
Output
Income
time)
Taxes
Local Taxes
Santa Barbara, CA
$19,484
$6,648
0.15
$1,383
$1,515
San Antonio, TX
$21,730
$7,197
0.18
$1,441
$1,358
Columbus, OH
$19,979
$6,578
0.17
$1,548
$1,404
Long Island, NY
$21,007
$7,400
0.15
$1,769
$1,879
United States (est.)
$306,914
$98,453
1.97
$19,119
$12,722
The impacts are the present value effects of $1,000 in energy cost savings per year for 25 years. To reduce this stream of
savings to a single number for comparability with project purchase impacts, the so-called present value of the savings is
calculated. For the present value calculation, it is assumed that the appropriate real (inflation adjusted) discount rate is 3
percent, and that energy costs rise at a rate that is one percentage point higher than other prices. The US totals are estimated
outside of IMPLAN using total US spending relative to the city totals observed in the program purchase modeling. These
impacts should be considered gross impacts, since the potentially offsetting impacts of reduced utility activity are not
captured in these measures.
i0p}>emlix C : f"AhibiEs - 31
EXHIBIT 2 (to Resolution 2022-023
(ƒ \ \}
:>! ,
r
f ««\>«w»«,:..:
I. Introduction
II. Benefits of C-PACE
III. C-PACE Financing Program Rules
1. Establishment of a C-PACE Program Boundaries
2. Administration of Program; Authorized Officials
3. Eligibility Requirements
4. Application Process
5. Application Documents
6. Closing Documents
7. Method of Determining Interest Rates
8. Billing and Collection of Assessments
9. Enforcement of C-PACE Lien
10. Program Fee
11. Term of a Benefit Assessment; Calculation of Useful Life of Qualified Improvements
12. Form of Closing Documents
13. Written Consent from Lienholder(s) Required
14. Provisions for Marketing and Participant Education
15. City/county Has No Liability or Financial Responsibility
2
3
4
4
4
5
7
8
9
9
9
i0
10
10
10
11
11
11
703299710 v1 ?
ABOUT C-PACE
Deschutes County (the "County") administers a Commercial Property Assessed Clean Energy ("C-PACE")
financing program (the "C-PACE Program" or the "Program"). The C-PACE Program allows owners of
eligible commercial property to obtain long-term financing from private capital providers for certain
qualified improvements. While the financing is repaid to the Capital Provider, the C-PACE Act directs the
County to impose a voluntary benefit assessment and record a lien (the "C-PACE Lien") on the property.
This approach to financing has been used by programs like C-PACE on thousands of properties in more
than 24 states and the District of Columbia.
The Oregon Statutes (ORS 223.680 and ORS 223.685) authorize local governments to establish property
assessed financing programs that help property owners finance energy, water, renewable, and seismic
Improvements to qualifying real property. The financing is secured with a lien on the benefitted property
(Benefit Assessment Lien) with the same priority as a lien for the assessment for local improvements. The
local improvement lien is an established mechanism used by municipalities for decades to finance projects
that provide a public benefit such as street improvements, water, sewer and street lighting.
Individual cities and counties may now take action to create their own C-PACE programs and help buildings
become more efficient and resilient. Creating a county C-PACE program is simple: first, a city/county
adopts a resolution and guidelines that govern how its C-PACE program works. Second, since the
repayment of the C-PACE financing is between a private lender and a property owner, when the lender's
lien against the property is filed, a county only has to review the lien application for compliance with the
C-PACE state law, and then record a unique agreement that includes the acknowledgment of a special
property "benefit assessment" by the city/county.
In Oregon, C-PACE financing is available in four categories: energy efficiency, renewable energy, water
conservation, and seismic rehabilitation improvements. Improvements that reduce greenhouse gas
emissions would qualify, provided that the improvements also conserve energy or result in renewable
energy improvements. A voluntary C-PACE loan is secured by a senior lien on the property and paid back
over time; tax liens and other government assessments remain superior to the C-PACE lien. Like other
assessments, C-PACE financing is non -accelerating, which means only current or past due payments can
be collected, while future payments are the responsibility of whomever owns the property at the time. The
C-PACE repayment obligation transfers automatically to the next owner if the property is sold. In the event
of default, only the payments in arrears are due. This arrangement spreads the cost of qualifying
improvements — such as energy -efficient HVAC equipment, upgraded insulation, new windows, solar
installations, or seismic upgrades — over the useful life of the measures.
The Program exists as a function of Oregon's C-PACE legislation and the rules established by the County.
No change in the Program or in Oregon's C-PACE legislation will affect a property owner's obligations to
pay C-PACE assessments incurred under the Program prior to such changes.
OR -PACE Program Guidebook
This Guidebook was developed to help counties launch C-PACE programs. The Guidebook and related model
materials are available at no cost to counties to use and adopt. A major benefit to using a ready-made and legally
reviewed program is that it allows counties, property owners, contractors, and capital providers to follow a
standard set of rules. This is critical in attracting the broadest capital investment to C-PACE projects.
703299710 v1
In this document you can find information about:
• Statutory and programmatic eligibility requirements for C-PACE properties and projects in Oregon
and Deschutes County
• Process for applying for C-PACE project approval
C-PACE offers benefits to building owners, developers, municipalities, mortgage holders, and building
professionals.
For Building Owners and Developers: One of the biggest barriers to converting potential projects to
completed projects for efficiency and seismic upgrades are the up -front cost of the types of measures
identified in the statute as qualifying improvements. C-PACE financing typically requires little up -front
investment, and qualifying improvements improve property value. Energy efficiency measures, in
particular, also lower operating costs. In addition, C-PACE financing has the following benefits:
• Up to 100%, long-term financing. Many owners lack the capital to complete efficiency and
seismic improvements. All direct and indirect costs incidental to the qualified improvements can
be wrapped into C-PACE financing.
• Transferrable upon sale. Some owners may want to sell the building before the financing is
repaid. The C-PACE lien and assessment are attached to the property and transfers to the new
owner.
• Cash flow benefits. C-PACE financing may be repaid over the useful life of the improvements,
which because of the long-term financing options can have positive effects on cash flow.
• Triple -net and Full -net leases may allow pass -through of assessment installments to tenants.
Under triple/full net leases, C-PACE payments can be passed along to tenants, who also typically
derive benefit from any energy savings through reduced operating costs.
For Energy Auditors, Architects, Building Engineers, and Contractors: By allowing a property owner
to access 100% up -front financing for longer terms than are typically available for conventional financing,
more substantial efficiency and seismic improvements are now more affordable with C-PACE. Energy
auditors, architects, engineers, and contractors can suggest C-PACE financing as a way for their clients to
implement needed energy or seismic upgrades that might otherwise be unaffordable. Since the demand for
building efficiency and seismic improvements will grow in a C-PACE-enabled jurisdiction, C-PACE is a
powerful business growth catalyst for building professionals like energy auditors and contractors.
For Cities/Counties: C-PACE is an economic development tool. By making it more affordable for building
owners to make major improvements to their buildings, local building stock value is enhanced, and more
jobs are created. Energy, water, and seismic upgrades create a more competitive environment for retaining
and attracting new businesses by lowering energy costs and improving the structural soundness of buildings.
Upgraded buildings can generate higher property tax payments for the city/county. Energy upgrades also
typically reduce greenhouse gases and other pollutants, which facilitates adherence to city/county or state
climate action plans or goals.
703299710 v1
For Existing Lien Holders: C-PACE improvements can enhance property value and typically improve a
building's longevity, thereby reducing the risk of property value decline over time. In addition, C-PACE
financing is non -accelerating, meaning only current or past due annual payments can be collected each year
while future payments stay with the property. As such, existing mortgage holders see their collateral
improved without substantial increase in credit risk and with only a modest impact on lien priority. C-
PACE financing is not permitted without the consent of all existing lien holders and, under certain
circumstances, the holders of certain other obligations encumbering commercial residential property.
The purpose of this Program Guidebook is to provide standard guidelines for counties to use in establishing
efficient and effective C-PACE programs that are consistent from across Oregon State.
This Program Guidebook (the "Guidebook") is prepared as required by the C-PACE Act, at the direction
of the City/county, and is approved in connection with, and as an attachment to, the enabling
resolution/ordinance for this program (the "C-PACE Resolution/Ordinance") dated April 20, 2022.
Capitalized terms used herein, but not defined herein, have the meaning given to such terms in the C-PACE
Resolution/Ordinance.
The Guidebook establishes guidelines, eligibility, approval criteria, and an application form for the
administration of the C-PACE Program for the City/county. The C-PACE Program enables financing for
commercial property owners ("Property Owners") to make certain energy efficiency, renewable energy,
water conservation, and seismic rehabilitation improvements (each, a "Qualified Improvement") as
described in the C-PACE Act and further clarified in this Guidebook.
Qualified Improvements, including all eligible costs that are to be financed as described in a project
application (the "Project Application") approved by the Program, constitute a "Qualified Project." Property
Owners may receive funding for their Qualified Improvements only from qualified private investors
("Capital Providers") pursuant to a separate Financing Agreement negotiated between the Property Owner
and Capital Provider (a "Financing Agreement").
In the following numbered subsections, a reader can find information about:
• Statutory and programmatic eligibility requirements for C-PACE project financing in Oregon State,
and
• The appropriate steps and forms needed for a City/county to receive and process a C-PACE project
lien application.
Deschutes County adopted Resolution No. 2022-023 and Ordinance No. 2022-005 on April 20, 2022,
establishing the C-PACE Program for all eligible commercial properties within the boundaries of Deschutes
County, including both incorporated and unincorporated territory (the "Region").
The County Administrator's Office is designated and authorized to oversee development of the C-PACE
program in accordance with ORS, this Program Guide, sample program documents and a fee schedule.
This oversight shall extend to delegated and outsourced services and management and will include review
of each Project Application to confirm that it is complete and contains no errors on its face. The County
703299710 v1
Administrator's Office (or outsourced designee) will then execute the Benefit Assessment Agreement and
C-PACE Lien documents on behalf of the City/county and record them with the real property records.
As part of Program operation, the County Administrator's Office (or outsourced designee) will:
• Accept Project Applications from Property Owners and Capital Providers for prospective C-PACE
projects.
• Review the Project Application to determine conformance with the Application Checklist.
• Approve/conditionally approve/disapprove the Project Application and communicate to applicant.
• Execute the Benefit Assessment Agreement, Notice of Assessment Interest and C-PACE Lien
("Notice of Assessment Interest") and Assignment of Notice of Assessment Interest and Benefit
Assessment Agreement ("Assignment").
• Record the Notice of Assessment Interest and Assignment.
Eligible Property means any privately -owned commercial, industrial, or multi -family real property of five
(5) or more dwelling units located within the boundaries of the Region (including properties owned by a
not -for -profit organization).
Ground leases on Eligible Property are permitted, so long as all requirements of the C-PACE Ordinance
are met, including requiring the Property Owner to enter into a Benefit Assessment Agreement. On ground -
leased property, therefore, the assessment and C-PACE Lien encumber the fee interest in the property, not
the ground leasehold.
Property Owner means an owner of qualifying eligible property, which is the record owner of title to the
Eligible Property. The Property Owner may be any type of business, corporation, individual, or non-profit
organization.
Qualified Improvements means a permanent improvement affixed to the real property that must meet at
least one of these criteria:
o Decrease energy consumption or demand through the use of efficiency technologies, products, or
activities that reduce or support the reduction of energy consumption or allow for the reduction in
demand or reduce greenhouse gas emissions ("Energy Efficiency Improvement");
o Support the production of clean, renewable energy, including but not limited to a product, device,
or interacting group of products or devices on the customer's side of the meter that generates
electricity, provides thermal energy, or regulates temperature ("Renewable Energy Improvement");
Guidance for Approval of Projects by County and their designees
® Whereas through Administrative Order No. DEQ-27-2021 and other statewide rules,
Oregon has set goals for greenhouse gas emission reductions. The County and its designees should
consider prior to approval of any project:
• Does the project increase emissions or discharge of pollutants? Pollutants are any substance
that contaminates air, soil, or water and that in sufficient concentrations contributes to undermining
public health.
• Is the project clean energy? Clean energy is energy that comes from renewable, zero
emission sources that do not pollute the atmosphere when used, as well as energy saved by energy
efficiency measures.
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® Does the project reduce greenhouse gas emissions? The County and its designees may rely
upon experts and/or available guidance. This includes, but is not limited to the Oregon DEQ Chart
on Carbon Intensity.
o Decrease water consumption or demand and address safe drinking water through the use of
efficiency technologies, products, or activities that reduce or support the reduction of water
consumption, allow for the reduction in demand, or reduce or eliminate lead from water which may
be used for drinking or cooking ("Water Conservation Improvement"); or
o Increase seismic safety through rehabilitation improvements ("Seismic Improvement")
Qualified Projects include the following:
o The acquisition, construction (including new construction), lease, installation, or modification of a
Qualified Improvement permanently affixed to an Eligible Property.
o For Renewable Energy Improvements, "permanently affixed" includes Qualified Projects that are
subject to a power purchase agreement or lease between the Property Owner/applicant and the
owner of the subject renewable energy system, if the power purchase agreement or lease contains
all of the following provisions:
a) The Renewable Energy Improvement relates to a Renewable Resource, which includes: (a)
low impact hydropower �ropower prqJectswa+er; (b) wind; (c) solar energy; (d) geothermal energy;
(e) bioenergy from biomass (like manure or wood products) or biogas (like methane); (f)
renewable hydrogen; (g) wave, ocean, or tidal power; O#Altematiive fuels h
b, ,7 1 renewable diesel.
b) The term of the power purchase agreement or lease is at least as long as the term of the
related Benefit Assessment Agreement.
c) The owner of the Renewable Energy Improvement agrees to install, maintain, and monitor
the system for the entire term of the Benefit Assessment Agreement.
d) Neither the owner of the Renewable Energy Improvement, nor the Property Owner, nor
any successors in interest are permitted to remove the system prior to completion of the
full repayment of the C-PACE Lien.
e) After installation, the power purchase agreement or lease is paid, either partially or in full,
using the funds from the C-PACE financing.
f) The power purchase agreement or lease specifies the holder of the C-PACE Lien is a third -
party beneficiary of the power purchase agreement or lease until the C-PACE Lien has
been fully repaid.
o Qualified Projects include the refinancing of existing properties that have had Qualified
Improvements installed and completed for no more than three (3) years prior to the date of Project
Application.
Qualifying Capital Provider may be any of the following:
o a corporation, partnership, or other legal entity that provides proof that it is currently registered as
a C-PACE Capital Provider in two different states with C-PACE programs;
o a federal or state -chartered bank or credit union; or
o a private entity, whose principal place of business is located in Oregon state, provided it is licensed
or permitted to do business within the state and can produce its most recent audited financial
statement or regulatory business filing.
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Qualifying costs that can be C-PACE financed include:
o Materials and labor necessary for installation or modification of a Qualified Improvement;
o Permit fees;
o Inspection fees;
o Financing or origination fees;
o Program application and administrative fees;
o Project development, architectural and engineering fees;
o Third -party review fees, including verification review fees;
o Capitalized interest;
o Interest reserves;
o Escrow for prepaid property taxes and insurance;
o Any other fees or costs that may be incurred by the Property Owner incident to the installation,
modification, or improvement on a specific or pro rata basis.
o See also the definition of Total Eligible Construction Costs in Section 5(4)(B).
The Program Guide reduces the administrative burden on participating cities and counties as much as
possible. Thus, the County Administrator's Office (or outsourced designee) will review the Project
Application Checklist for proof of compliance with the requirements of the statute that are necessary for
the City/county to approve the application and execute the applicable documents for the proposed C-PACE
transaction. All applicants are encouraged to review the Project Application Checklist accompanying the
Application to ensure that the types of information that the City/county will rely upon to verify compliance
with the statute are present in the completed Application.
The process of obtaining financing under the Program starts when a Property Owner approaches a Capital
Provider. The Capital Provider will work with the Property Owner to collect a number of diligence items.
Once all the items have been received, reviewed, and approved by the Capital Provider, the parties should
settle on the loan terms.
The general flow of the C-PACE application process will be as follows:
(1) The Property Owner and the Capital Provider prepare the Project Application, consisting of the
Project Application Checklist and all supporting documents (described below). Applicants are
encouraged to review the Project Application Checklist accompanying the Project Application to
ensure that the types of information that the City/county will rely upon to verify compliance with
the C-PACE Act and C-PACE Resolution/Ordinance are present in the completed Project
Application.
(2) The County Administrator's Office (or outsourced designee) will have 10 business days to review
and approve the Project Application. If the office has received an unusually high number of
applications, or if review is delayed because of some force majeure event, the office may notify the
applicant that the application review and approval will be delayed by no more than 10 additional
business days.
(3) The City/county application review process is confined to confirming that the Project Application
is complete and all attachments conform to these guidelines. City/county approval does not
constitute endorsement of any representations that may be made with regard to the operation
and any savings associated with the Qualified Improvements. All risk and liability is borne by
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the property owner and capital provider. The County Administrator's Office (or outsourced
designee) will review the Project Application for proof of compliance with the requirements of the
C-PACE Act and C-PACE Resolution/Ordinance that are necessary for the City/county to approve
the Project Application and execute the applicable documents for the proposed C-PACE
transaction. Incomplete Project Applications will be returned to the applicant, and the County
Administrator's Office (or outsourced designee) will notify the applicant about which items from
the Project Application Checklist were not provided or are insufficient or inaccurate on their face.
If the Project Application and supporting documents comply with the Project Application
Checklist, the Project Application will be approved, and the approval communicated in writing to
the applicant.
(4) The Project Application may be conditionally approved if the application is complete but the
attachment regarding lender consent is not yet available. Conditional approval will be treated the
same as an approval, with exceptions noted below.
(5) Upon receipt of approval, the Capital Provider will draft the following "Closing Documents": The
Benefit Assessment Agreement, the Notice of Benefit Assessmentand C-PACE Lien, and the
Assignment of the Notice of Assessment and Benefit Assessment Agreement. At or before closing,
at the request of the applicant, the designated and authorized official will execute Closing
Documents.
(6) If the Project Application received conditional approval, the Closing Documents executed by the
City/county may not be released from escrow unless and until all contingencies (including lender
consents) have been received and executed in accordance with the Program Guide.
(7) At closing, the City/county will record the Benefit Assessment Agreement, the Notice of
Assessment interest and C-PACE Lien, and the Assignment of the Notice of Assessment interest
and C-PACE Lien in the Office of the Clerk for Deschutes County. At the election of the applicant,
the City/county may delegate the recording of the Closing Documents to the applicant or their
designee(s).
(8) Upon confirmation of recordation, the Capital Provider will disburse funds in accordance with the
Financing Agreement.
(9) The Property Owner begins making assessment payments per the Benefit Assessment Agreement
and in accordance with the Financing Agreement
The Project Application must be submitted with the following documents appended:
• Project Application Checklist
• Lienholder(s) Consent
• Certificate of Qualified Improvements:
(1) For Renewable Energy Improvements or Energy Efficiency Improvements on an existing
building: A certification stating that (a) the proposed Qualified Improvements will either result
in more efficient use or conservation of energy or water, the reduction of greenhouse gas
emissions, or the addition of renewable sources of energy or water; or (b) the subject property as
a whole prior to the installation of the Qualified Improvements does not conform to the meeting
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the current building energy or water code for the City/county, but will do so after the Qualified
Improvements are installed.
The certification must be performed by a licensed professional engineer or accredited individual
or firm from the following list:
• American Society of Heating, Refrigeration, and Air -Conditioning Engineers (ASHRAE)
o Building Energy Assessment Professional (BEAD)
o Building Energy Modeling Professional (BEMP)
o Operations & Performance Management Professional Certification (OPMP)
o High -Performance Building Design Professional Certification (HBDP)
• Association of Energy Engineers (AEE)
o Certified Energy Manager (CEM)
o Certified Measurement and Verification Professional (CMVP)
o Certified Energy Auditor (CEA)
• Building Performance Institute
o Energy Auditor
• Investor Confidence Project
o ICP Quality Assurance Assessor
Other professional entities may be accepted by the County at its discretion.
(2) For Renewable Energy Improvements that are solar photovoltaics, a North American Board of
Certified Energy Practitioners (NABCEP) PV design specialist certification is acceptable, or a
licensed Electrical Engineer, Building Energy Assessment Professional (BEAD), Building Energy
Modelling Professional (BEMP), Certified Energy Manager (CEM), Certified Measurement and
Verification Professional (CMVP), or Certified Energy Auditor (CEA). Other professional
entities may be accepted by the County at its discretion.
(3) For Seismic Improvements on an existing building: A Tier 1 and Tier 2 building performance
report that conforms to American Society of Civil Engineers and the Structural Engineering
Institute 41 - Basic Performance Objectives for Existing Buildings (unless a Tier 3 evaluation is
required by ASCE 41) is required on all Seismic Rehabilitation Improvement projects. All ASCE
41 evaluation must be performed by a State licensed structural engineer. The evaluation must
justify the cost measures included in the Application as cost-effective.
(4) For New Construction:
(A) Relating to energy or water efficiency, certification by a licensed professional engineer
stating that each proposed Qualified Improvement will enable the subject property to exceed the
applicable energy efficiency, water efficiency, or renewable energy code requirements. If the
building as a whole performs above code, all energy and water -related improvements are eligible
for financing; or, alternatively, 30% of the Total Eligible Construction Costs qualify for C-PACE
financing.
(B) "Total Eligible Construction Costs" or "TECC"_means all direct and indirect costs of
materials, labor, and soft costs related to the design, installation, and construction of the new
structure. Soft costs may include, for example, architecture and engineering fees, energy modeling
costs, surveys, and development fees and financing costs. Costs that are excluded from TECC
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include the costs of land acquisition, off -site improvements, site permitting, environmental testing
and remediation, and equipment not permanently installed on the property.
(5) Term of Benefit Assessment:
For all Qualified Improvements, the licensed engineer, individual or firm providing the
certification of eligibility of the Qualified Improvements must attest that the proposed term of the
financing does not exceed -the weighted average effective useful life of the proposed Qualified
Improvements and that the Qualified Improvements are permanently affixed, as described in this
Guidebook.
6Documents
The following documents require the signature of the City/county and shall be part of the closing of any
C-PACE transaction. Each document must be substantially similar in substance to the forms provided,
although it is expected that Property Owners and Capital Providers will negotiate variations tailored to
their specific projects.
• Benefit Assessment Agreement
• Notice of Benefit Assessment and C-PACE Lien
• Assignment of Notice of Benefit Assessment and C-PACE Lien and Benefit Assessment
Agreement
Interest rates are negotiated in a Financing Agreement between the Property Owner and the Capital
Provider. A City/county has no role in reviewing, setting, or opining on such interest rates or other aspects
of the Financing Agreement. Market forces — such as competition, the intended use of the property, potential
risk —will affect the terms negotiated by the Property Owners and Capital Providers.
zff=z f .ti
Billing, collection and enforcement of delinquent C-PACE Liens or C-PACE financing installment
payments, including foreclosure, remain the responsibility of the Capital Provider, and the terms are
negotiated within the Financing Agreement.
At the Capital Provider's discretion, a delinquent account can be referred to the County for enforcement
through the Local Improvement District collection process outlined in ORS 223.505 to 223.650. The
County is entitled to recover its costs during the enforcement proceeding. Further details are in the Capital
Provider agreement in the Program Documents.
10. Program Fee
The County, as compensation for time and costs incurred in the establishment of the C-PACE Program,
including the C-PACE Resolution/Ordinance, this Guidebook, the draft documents, as well as for reviewing
a Project Application for completeness and executing the Benefit Assessment Agreement, C-PACE Lien,
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and Assignment, is entitled to a fee equal to 1 % of the amount financed by the Property Owner, or a
minimum of $2,500 and capped at a total of no more than $15,000. The Property Owner must pay this fee
to the County at the closing of the transaction between the Property Owner and the Capital Provider, and
such payment is a condition precedent to recording.
II.Term of a Benefit Assessment; Calculation of Useful Life of Qualifie!1F,
The maximum term of a Benefit Assessment may not exceed the useful life of the Qualified Improvement,
or weighted average life if more than one Qualified Improvement is included in the Qualified Project.
The Program has adopted form Closing Documents: The Benefit Assessment Agreements, Notice of
Benefit Assessment and C-PACE Lien, and Assignment of Notice of Benefit Assessment and Benefit
Assessment Agreement. A Property Owner and Capital Provider may adapt the forms to the needs of their
particular transaction but must not modify or omit any material substantive terms contained in the forms.
Before entering into a Benefit Assessment Agreement with the County, and pursuant to Oregon Statutes
223.680(6)(a) and (b) and 223.685(5)(a) and (b), the Capital Provider must obtain, and the Project
Applications must show proof of notice and written consent for the placement of the assessment and C-
PACE Lien from any holder of a lien, mortgage, or security interest in the real property.
If the consents are executed at closing, the signatures of the County to the Closing Documents will be held
in escrow and will not be released until the consents are obtained. After closing, at the election of the
County Administrator's Office (or outsourced designee), an amended Project Application with the consents
attached must be sent to the County. Capital Providers are responsible for providing their own form of
consent that conforms to the C-PACE Resolution/Ordinance and C-PACE Act.
This Guidebook will be made available to the public on the County website. it ;s dete ruin e *' t thef"
marketing and pai4 ^ii„^r* �+ this times. It is presumed that Property Owners and
Capital Providers understand the principles and processes associated with C-PACE financing and will look
to the Guidebook for understanding and clarification of the County Program.
11
i ui FF.
As detailed in the Benefit Assessment and Assignment Agreements, neither the County, its governing body,
executives, or employees are personally liable as a result of exercising any rights or responsibilities granted
under this Program. The County shall not pledge, offer, or encumber its full faith and credit for any lien
amount under the C-PACE program. No public funds may be used to repay any C-PACE financing
obligation.
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